- Don’t follow the suckers. In other words, don’t buy the mega-cap tech stocks up at these levels. They’re now ripe for a powerful decline.
- The Transports have played catch-up quite nicely, but they’re getting overbought on a near-term basis.
- Love him or hate him, you have to admit that Donald Trump in the one who sets the political narrative today
The rally only gets more and more narrow
It was a very quiet day in the markets yesterday. The volume actually the highest volume in 2.5 weeks...but that was only due to some month-end window dressing at the very end of the day. At 3:45 yesterday afternoon, we were on pace for the lowest volume day of the year...so there must have been some sort of month-end program. (The changes in the DJIA should not have had an impact.).....If there was one thing that was interesting, it was the breadth on the Nasdaq Composite index was negative...even though the Nasdaq rallied 1%. This kind of negative breadth on a positive day for the Nasdaq is becoming commonplace recently, but when it comes when the index rallies 1% or more, it definitely raises some serious concerns. (Wouldn’t it be nice if this narrow market actually had a whopping 50 names rallying strongly instead of less than 10? In other words, this rally is a lot more narrow than the “Nifty 50” rally of the early 1970s.
Of course, the Fed should be able to prevent the kind of bear market that took place after the “Nifty 50” bull market ran its course in the 1970s, but to quote Judge Smails in Caddy Shack, the “internals” for this rally still “sssssssssssssuck”...even worse than they did back then. We won’t bore you by regurgitating the details of overbought condition of many of these ...