CALDEIRÃO DE BOLSA

Obrigado, figas!

Por acaso não tens os numeros dos bullish advisors e de sentimento?

TUESDAY a.m.
August 5, 2003



Another Day, Another Bounce
by David Nichols

A surprisingly strong opening barrage of selling took the S&P 500 to the brink yesterday at the well-known 965 level -- which is the last line of fortification for the bulls to avoid a larger scale sell-off.

Naturally, the bounce off this level was pretty spectacular. This market is just not in a mood to roll-over, despite all the obvious technical and sentiment clues. Perhaps it's too obvious?

But we've got to look at where the speedy market moves are coming, and this latest one was again down. The swiftness of moves is important in trying to identify a trend, especially, I guess, where no intermediate trend really exists -- such as now.

A look at the S&P 500 futures (a "purer" read than the cash index on the trading flow), shows a quick move down from 1004 to 964.75, which retraced back up 50% in short order after the first hour low.


A subsequent move today back above the 61.8% level at 989 in the futures -- a move that sticks, that is -- puts the market right back in neutral, and possibly gunning for the upside breakout at 1015.

But for now we can still work under the assumption that the pop in volatility, as evidenced by the recent rise in the VIX, and the downdraft out of that recent triangle in the S&P 500, could be the start of a more violent reaction down


The VIX looked early on like it was going to break free of the range, and the "fear epidemic" was going to really proliferate. It still might, actually. These selling epidemics accompanied by rising fear don't always take off in a straight shot. There has to be some really bad news flow that galvanizes the majority into an "uh-oh" reaction, and a desire to liquidate long positions, if the VIX is just going to take off from the low 20s.

The fact is, nobody really knows what to make of the underlying factors in this market, from the Fed on down to you and me. You can carve out a convincing fundamental thesis to fit any mental state you happen to be in. This is always the case, mind you -- but it's especially exagerrated now that the fundamentals appear poor but mildly improving, but the chart action looks really good. In such an uncertain environment, everybody ends up just watching the ticks flow by, trying to "outguess the outguessers". And that's how you get a market that has hit this level of congestion on the daily fractal dimension indicator:


There really just aren't a lot of startling brilliant observations to make about this market. The market's not giving the easy downside trade, like it has so far during the bear market. But there are just too many bulls around to sustain a further advance.

But with the current set-up, the bulls are really only one push away from hitting the sell buttons, if some sort of galvanizing bad news hits the wires right now. As I said yesterday, during such an event "we'll know it when we see it", as the VIX will pop up out of its range and hold above it, and prices will fall convincingly below the support levels that have been holding lately.

Sentiment Dashboard
by Adam Oliensis



SENTIMENT TANK: Filled by 1 point to 14% full of negative sentiment. The tank has been showing ripple-y waves at a low level. It has now filled up to the top of the recent range.

SHORT-TERM: Hourly advance phase kicked in after the decline phase exhausted itself in the second hour of trade on Monday. This hourly phase is still "turning up" and could roll over into follow-on decline, but as of the close on Monday the momentum of sentiment was traveling in the bullish direction.

MID-TERM: Tipped slightly onto the decline side of the gauge at 39%. Our confidence reading is at a bullish 1, however. It's flirting with giving a clear signal but hasn't done so at this point.

LONG-TERM: Dropped into the decline side by 5 points to 9% but like the mid-term gauge has a slightly positive confidence reading. Also flirting with a significant sell signal but has not yet given one.

BOTTOM LINE: Last Friday the market peeked over the edge of the precipice. On Monday it hung an arm and a leg over and waved at the yawing abyss, but didn't jump. (OK, it's not quite an abyss, not with a varity of support levels between here and SPX 900.) The hourly gauge has turned back up, if not-quite-yet convincingly. Upside follow-through will take the market out of immediate danger. If the SPX hangs a leg over below yesterday's low (967) we'll very likely have a genuine sell signal.