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Market thoughts
Now this is something. The Spitzerized Nasdaq Insurance Index closed at an all time high today. The market never ceases to amaze. Nasdaq Financial Index also - all time highs. Quite a bear market, as stocks continue to push into unchartered territory with highs never seen before. Makes you wonder how long before the DJ transports break the all time highs set in 1988 at 3700. The Nasdaq Transports of course are already there as is the Nasdaq Banking Index and the S and P Retail index.
OK, enough rah rah bull. The Dow and techs remain sickly, as do telecoms, boxmakers, semis, and others, all closer to their lows than they are to new all time highs, and all grossly overvalued. What to make of this split two tier side by side bull and bear markets? The million dollar question I suppose.
The Dow held 2 day gains, and volume retracted a bit. S and P 500 volume was very good though, and well above the 50 day moving average of daily volume as it pushed a little further up. Volumes on Nasdaq also trailed off. Digestion, or close to another interim peak? Who cares really? Techs were, are, and will be the bubble until its been fully deflated. I suspect that small caps will be where the real action is if the market can muster up a Q4 rally that's noteworthy. Things could fall into place for just such a year end event, once election is behind us, and with the aid of a dip in energy prices. New all time highs in the SP-600 are within spitting distance anyway. Small caps and microcaps are about the only place offering up value here and there. Take a look at LKI, which was a steal down at $7 last month when it sold for a 35% discount to net asset value. Still 15% below tangible book value, with nice earnings last quarter. http://stockcharts.com/def/servlet/SC.web?c=lki
In the broad market they took a breather, advancers and decliners paired off evenly, and the highest volume surge segment came in about the same. A/D volume however remained positive with a differential of a billion more shares on the upside. IMO that aint Joe Blo doing the buying. However the number of stocks within 15% of their all time highs pulled back by 1% in contrast to a Breakout scan which came in better than 2 to 1 positive over breakout. All in all, really a mixed day with a positive bias. The market had to absorb the two day rally sellers, but it still hung in. VIX and CBOE put/call ratio not saying anything extreme. Maybe once Bush sends Kerry packin next week, the market can have a little relief.
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