Friday, June 10, 2011

Market comments for June 10th

The market gain yesterday in the Dow and other indexes might have been impressive, fist glance when you consider the Dow gained 75 points to close at 12,124, but of note to me was that the volume was less than the previous 3 days this week in the chart below. That is not the kind of bottoming out of a declining market that one would expect.

Of additional note has been the Put to Call ratio of this week, as is shown in the chart below. Pay particular attention to the little red line average of this week's data at the end of the chart. It is clearly above the recent trend line. The graph is of the Put to Call ratio from Oct. 2nd, 2008 to the close of the market yesterday. The Put to Call ratio has exceeded 1.00 for 7 consecutive days as of the close yesterday. This has not occurred since the period from Oct. 2nd-Oct 9th, 2008. So take note of where we are right now. We are at the beginning of where the final crisis started in 2008, comparing the 2 sets of Put to Call ratio data that had 7 days in a row above a 1.00 reading!

Today's Futures point lower and while I would expect a continued bounce today to close the market to the upside, This recent decline has more steam to go lower. As the issue of raising the debt ceiling becomes more of a game of chicken with politicians, I think this will take its affect on the markets. I think we are headed to test 11,600 in the coming week or two.

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