August 29, 2008
Well it has become the trend of late – two or three steps forward and one gargantuan step backwards. What makes this all so very interesting is that reports on durables and personal income are having huge impacts on the market, when their impact prior was usually minimal. In fact, for the bulls, any negative reading in these types of reports have always provided an excellent buying opportunity that would be snatched up by longs before heading into the afternoon session. But the past few weeks has seen some major swings in the market off of these reports.
That makes us wonder if the bulls are testing the waters with their capital and as soon as a negative reading comes out, it causes a knee-jerk reaction in which they get out of the shallow waters. There is no doubt that the bulls are extremely tentative to jump into this market as noticed by the extremely low levels of volume seen since mid-July. This leads us to believe that the markets are in a very fragile state still, and that any kind of new Bear Stearns-like bank crash or another run up in oil could send this market spiraling downward.
Here’s the Nasdaq and S&P charts…
