Still not convinced

I don't think I have to say anything today, kind of obvious. Hope I convinced you to wait to buy for a few days.

not convinced ...

Just a quick note about the market.

The bounce did happen, but so far it's not very convincing.  Not a ton changing in the underlying internals of the market from yesterday to today although a little pressure was let off.

Tomorrow needs to be strong, or I would expect more downside.  If tomorrow is strong then it might be time to get in, but I'll analyze end of day again.  My gut says tomorrow might have upside but it will be mostly from short covering and not true buying.  If the buyers don't come out, then the market will fall again and shorts will buy more positions and it probably will fall hard and fast again.

For full disclosure, I bought some etf's end of day (long), but I don't plan to hold it for more than a day or two UNLESS I see a lot of strength.  So, still no long term holdings planned.

a bounce today ...

Good morning.  A quick pre-market note in case you are thinking of putting money in the market today…

Well, as I said in my email yesterday, we are getting the bounce that I said would be coming soon … this morning in pre-market hours we are up roughly 0.35%.

I would be really surprised if the gains we see right now hold through the day though.  I’m still very suspect at this point.  Any upside will most likely be met with selling from people wanting to get out of their losers as well as people wanting to add to their short positions (‘buying the dip’). 

With that said, most corrections in the market are contained within an 8% loss and as of yesterday we have lost 7.51% from the top on 7/7/2011.  So … if this is going to be a ‘minor’ correction, we might be at a short term bottom. 

I let the market lead and I follow, so for now I sit in cash … wait and watch and let the market tell me which way it wants to go.  We certainly will have a better idea at the end of the day.  Trying to get a jump on a rally is just asking for trouble, “When the wind is at your back ATTACK, in your face disgrace!”

Have a great day wherever you are …

how soon is a bounce coming?

As you all know after today’s huge decline, the market is REALLY oversold now.  in fact 49.4% of the market sits 2 standard deviations below the 20 day moving average.

Looking at history to see how close we are to a bounce, looks like we could be very close, but that ultimately there is a good chance the bounce will fail and we will continue down.  I looked all the way back to 2004 to see how many times we had 45% or greater of the sp1500 this far away from the previous 20 days price and found only six times.  I realize I am grossly over generalizing since we only have 6 occurrences, but I wanted to share the info nonetheless.

…

5/20/2010 45.5% of the market below 2 st dev, next day 1.46% bounce, but continued down for roughly another two weeks 2 percent decline

5/6/2010 50.60% of the market, next day dropped another 2%, then bounced roughly 6% over the next three days.  Then continued down for roughly 4 weeks for another 6.5% decline (from the close on 5/6) before hitting a bottom.

11/20/2008 53.7% of the market, the next five days produced a huge bounce or almost 19.40% from the bottom.  After that the market was basically in a trading range until late January. 

10/6/2008 54.6% of the market, the market continued to decline for 4 more days with a decline of almost 15%, then we had a one day big bounce of almost 10%, then the market continued falling for about a month.

7/26/07 52.3% of the market, the next day the market fell another 1.89%, then a one day bounce of 1.33%, then the market continued downward over the next two weeks for a 5% decline (from the close on 7/26/07) before hitting a bottom.

3/5/2007 49.7% of the market, a bottom was made this day and the market rallied for month’s after this.  But, the market was already in a huge rally and only paused for 9 days before continuing … definitely not in a range bound market.

I think most will agree, tomorrow will tell another story and will give more clues as to where the market wants to lead us, but for now I sit on the sidelines.

nasty

A nasty, nasty day.  I would suggest waiting to buy.  I think we have some more downside, today we tested the june low and it didn’t hold … just kept on going.  That’s a bad sign.

testing the market

Good morning.  Although I bought a little today and yesterday, I am NOT convinced that the market is ready to go up.  I am testing the market with these small purchases, but not very confident.  In fact, I'm only buying because of most other people’s assumption that we are close to a bottom.

Today is kind of important as it is testing a low that it made a few days ago, so if it can hold that low … it is a good sign and if it doesn’t hold it … we will probably another few percent to test the low of June.  So today is important.  BUT … all my analysis shows that we have NOT hit a bottom as of yet and we have to go down more still.  How much further is a good question.