Thursday, February 12, 2004

Anecdotal evidence of too much recognition of a good market...the February issue of Forbes has a cover story shouting "Tech is Back", touting a 57% return over the past year.  Yikes. 12:27:22 PM

Our shortest-term model, STEM.MR is creeping lower and lower (meaning there is more and more optimism currently in the market).  It is not yet in extreme territory at 25%, but right now it is showing its lowest reading since January 16th.  Again, as long as we're trading at new highs, I don't yet have an interest in attempting short positions, but I am watching the levels around the January highs closely.  If the S&P and Dow fall below those levels, and with the optimism currently in the market, it may pay to try the short side for a trade. 11:34:29 AM

Yesterday's move was impressive, at least in the S&P and Dow as we made new highs.  Our shortest-term sentiment measures (see link to your right for Intraday Charts) are only mildly overbought even with the rally.  Our short-term indicator "score" is now negative for the market, though it is not as extreme as it has been other times these rallies have been stopped.  So, I'm not at all inclined to short into new highs.  However, I will be watching the old highs closely.  If the S&P futures drop back under 1155, and the Dow futures under 10,684 it could trigger some short-term selling and technicians seize on a potential failed breakout. 8:56:51 AM