Market comments for Nov. 9th, 2011

Sorry I haven't posted recently, I was away back east to see my Mom and when I returned I had caught a very bad cold. But I'm back now and let's get at it.

I have watched the rise of the Dow recently as well as the other indexes over the 200 day Moving averages. But todays drop of between 200 and 300 points this morning, shows the strength of the 200 day MA line as a resistance level. The market actions have not made sense given the news in Europe and the fact that our own government may get downgraded as well for a second time. Greece has not really solved its problem but they did replace their leader. Italy may replace its leader as well, but replacing the leader doesn't solve this crisis in either countries and more than it would here. The problems are similar and the pain will have an impact and it is human to avoid pain. So my guess is that these problems will unfold stubbornly over time. The only solution I can see is a breakup of the EU in some fashion. Either the countries of the south like Greece and Italy will not be part of the EU anymore and possibly Portugal, or the entire EU will eventually dissolve.

Below are the charts for the Dow, S&P 500, the Nasdaq and the Russell 2000 with their 200 day Moving Average lines. Unless the market can stay above these levels we are headed lower. Needless to say, it may be true again that the last rally we had was a bear trap. More on that over the weekend.

Market comments for Oct. 14th, 2011

Today's focus is on the Put to Call ratio for all Equities and Indexes. The chart below shows this ratio for all of 2010 and Year to date for 2011. You can see from the chart that this ratio has been greater than 1.0 for all but 3 days since July 29th, the area under the red line. This while the stock market has rallied this past week. Many are wondering whether they should jump on this rally so they don't miss it. Some wonder whether there will be a sharp reversal and that this is a Bear trap. To answer this question, the Put to call ratio should help you decided. People believe there is a Bull market when the ratio is much lower than it is now. So one thing to watch is whether the Put to Call ratio daily readings start to consistently stay below 1.0 and start heading down to 0.7 or 0.6 or lower, but that's not where we are now. Paying attention of this data can help take out some of the anguish of trying to decide what to do.

Market comments for Oct. 12th, 2011, Columbus day

Say what you like about this rally, it has surprised everyone, including me. I had to look at the chart this morning to see just how high it has climbed back up from the bottom and to see whether I think it will hold. The chart below shows it was a rise of about 8% in 7 trading days. However, when I look at the very low and dropping volume, I am very suspicious of this rally and it appears to me to be a another bear trap. Here's the chart. You decide!