Is This Market Really Sick Or Too Big To Fail

May 23rd, 2012
in Gary's blogging

Today is going to be interesting seeing where the markets close, tomorrow even more so. The indexes are not high enough in the new channel to be topping out nor are they low enough to supports to have signaled a bottoming. There have been no volume spikes to signal a direction, in fact the volume is still down considerably YoY and that is a prognosticating problem for financial analyst's like myself. Is the market place really sick or what?

Follow up:

What I am talking about, is how one is to gauge any potential issues with accuracy in determining market positioning and percentage swings. That is our job to be able to reasonably ascertain market movements given quality quantitative information. Quality is the key word here and in any investigation of facts, or fiction, one must have a quantifiable number to affirm any accuracy. The lack of market volume makes a health prognosis of the current market very difficult. Are the markets really going to crash or are they too big to fail?

Such as we have with the Greek tragedy now standing before the tribunals of financial judgment and perhaps about to bring the financial markets crashing. The Greek 'potential' exit seems to have caught the attention of the MM and all talk is of renewed doom and gloom if Greece really does exit. If you think about it, this is really dumb, because most of us new it was going to happen months, even years ago. If the water drum has holes in it, the water is going to drain out if the holes aren’t plugged. That is kind of situation where Greece has been for some time as I see it, so what is the big deal now?

One headline states, “There is very little if any positive news for investors to hold onto at the moment, as panic and fear seem to be firmly in the driver's seat.... “. Another reads, “Selloff Accelerates on Wall Street”. Another, “Rally Fades on Mention of Greek Contingency Planning”. And another blurb, “Greece Says an Exit From the Eurozone Would Be Catastrophic”.

The problem I have with such panic headlines is that it isn't warranted – just yet anyway. The markets could very well bounce off the 200 day MA and supports as mentioned in a previous report, Market Numbers Say A Positive Market Correction Is In Order. Yes, the probability of the market descending further is a real threat, but it hasn't and there is just as many good reasons why it won't. Unless your crystal ball is clearer than mine, I am not going full short until that demarcation is crossed.

As I type this morning I am watching the Indexes slide down to the previous low points 3 sessions ago and stop, going no further. That is a sign of resistance in violating that support which must be overcome to descend further and we haven't even reached the extremely important 200 day MA demarcation mentioned above. I just can't get enough enthusiasm to justify a full out waterfall in the making as many MM pundits are asserting.

At this point in the game you should have dumped all your dogs way back in April when I penned the article, Why Wait For May, Sell In April And Avoid The Rush. If you haven't lightened your portfolio by now, then you are in for the long haul and unfortunately for you, this hay wagon is falling apart at the seams. Now should be the time to plan your next approach with cash in the pocket and see if the 'Summer Rally' is going to be a real event this year. Or are we going to see better market bargains in the very near future. Patience will reward any investor with cash in hand and that is exactly where you should be at this moment in time.

Successful traders and investors alike are the patience ones that do not get emotionally involved, but carefully analyzing what facts can be gleaned from the clutter of pundits seeking attention getting headlines.

To contact me with suggestions or deserved praise:

Written by Gary

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