Wednesday, September 28, 2011

Market note

We've had a little rally in the indexes the last couple of days and this morning the indexes are down early. So can we expect the selling to continue? Maybe. But I've noticed a couple things that may portend a coming rally.
First, look at this chart of Bank of America. It has been a large downtrend for some time. And the new lows have been on larger volume. However, lately the price has gone SIDEWAYS on increased volume. Often this is the first sign of a bottom forming. Time will tell of course. Here is that chart.
Note the volume at the bottom of the chart.

Next, is the long bond. TLT is the chart. This morning TLT is weak at the same time the stock indexes are weak. Usually TLT is strong if we can expect another selloff. Time will tell. Here are the charts for TLT and the inverse TBT.

Also of note is TBT showing new lows on lower volume, another indiction of the selling running out of steam?
As usual, time will tell. To be prudent it is necessary to wait for the market to signal a direction, and put on long positions as the rally proves itself. (Unless you are an "investor" of course.) I prefer to "trade", nimbly, as I feel that I am better able to control my risk that way.

"He who loses the least, WINS."
                             Richard Russell


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