Mr. Market Is Up To Its Old Tricks Again, But Has It Peaked

March 19th, 2012
in Gary's blogging, midday post

Absolutely the market opened down as reported and absolutely the market did move as suggested this morning. But what it didn't do is stay that way for long as the Russell 2000 shot through its resistance at 9:40 this morning to 837.28. Then followed by the other markets except the DOW. The 500 reached 1413 and is currently 30 cents down. The DOW didn't react as the 500, and other indexes, in that it moved to 13290 and has backed off to 13265 which leads me to believe this market is not for real. The Russell 2000 jumped to 837, 4 points above the resistance, paused and has now moved up to 841.30.

Hard to believe the DOW hasn't jumped on board the train which signals caution in my camp. Gold jumped up to 1670 at its high today and backed off a bit as well as Brent at 125.46, currently off 30 cents. The USD has fallen smartly to 79.60 giving credence to the markets rise, but I am not sure which is the cart or the horse.

There are still serious issues with these moves to the upside because of  low volumes being recorded. This bull run doesn't walk and quack like a duck and is getting to become more suspicious with every session that goes by. The cash crowd, AKA retail investors, that previously moved out of the stock market and reportedly to have placed their trust in bonds maybe changing. Reports now indicate that the feeble increase of volume is those retail investors treading lightly by being more involved in purchasing stocks again.

Cameron Brandt, senior global market analyst at EPFR Global, a Cambridge, Mass.-based firm that tracks fund flows recently reported.

"The pace of the retreat has certainly slowed in recent weeks. The case for them jumping back in is that it's very hard to get a decent return on your investment right now." "If the market stays up around this level long enough, I think it will gradually draw retail investors back in."

As one analyst pointed out, "That [thinking] goes against the conventional wisdom on Wall Street [today], which says when you see retail investors returning, the market has peaked"

Right now the trend is up and is your friend, until it isn't of course. If the market is truly reaching a top, then the retreat will be all the more interesting as the retail crowd flees realizing their mistake. Again, I am sitting on my hands waiting for the "signal".

Trading is not at the optimum time right as it is weighted on the riskier side of the equation. I watch the ETF's for additional signals for when it is best for me to jump in. Two ETF's I watch is, at the long, TNA and, the short, TZA which are good helping determining risk and reward. When the divergence of the 2 is greater than 10 to 15% over several weeks you can normally take some risk out of the equation, but when the ETF markets do not move much as seen here, it is probably best to wait until better times come. (TNA candles and TZA line)

Written by Gary

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