{"id":881,"date":"2007-11-26T22:00:27","date_gmt":"2007-11-27T03:00:27","guid":{"rendered":"http:\/\/selfinvestors.com\/tradingstocks\/weeklyafter-stock-market-review-archives\/contrarian-indicators-show-tradeable-rally-imminent\/"},"modified":"2018-08-12T01:33:54","modified_gmt":"2018-08-12T06:33:54","slug":"contrarian-indicators-show-tradeable-rally-imminent","status":"publish","type":"post","link":"https:\/\/selfinvestors.com\/tradingstocks\/weeklyafter-stock-market-review-archives\/contrarian-indicators-show-tradeable-rally-imminent\/","title":{"rendered":"Contrarian Indicators Show Tradeable Rally Imminent"},"content":{"rendered":"

As an indication that we are far from bull market trading where bad news is brushed aside and any glimmer of good news is a catalyst for a rally, the early positive tone from strong Thanksgiving weekend retail numbers gave way to more financial doom and gloom and a rush to the equity exit door.  Citigroup layoff rumors, UBS downgrades of Freddie Mac and Fannie Mae and finally Senator Charles Schumer urging regulators<\/a> to look into the risks associated with the goverment lending to Countrywide Financial which Schumer called "their personal ATM machine" provided the gloom du jour.<\/o:p><\/span><\/p>\n

From a price standpoint today’s action was obviously ugly, but volume levels didn’t show tremendous conviction behind the move and leading stocks held up remarkably well (see below).   However, it was the first day of trading after a long holiday weekend, so taking that into consideration today’s action was no fluke and sets us up for further deterioration and a test of the August lows in the Dow at 12517.  The S&P and Nasdaq still have strong support levels in place before setting up a test of their August lows with the S&P500 level of 1400 and the Nasdaq level around 2500 becoming important psychological levels of support to keep an eye on.<\/o:p><\/span><\/p>\n

I’ve been mentioning in recent reports that we are close to a tradeable bottom and as Doug Kass points out over at the Street.com, several contrarian indicators support this theory.<\/p>\n

– Net long hedge fund exposure has plummeted
\n– Invidual investors are now as bearish as they were in summer of ’06 and March of ’03
\n– Consumer confidence at levels not seen since 1992
\n– Market oscillators indicating dramatically oversold<\/p>\n

DailyWealth has also pointed out recently that we’re due for a bounce based on indicators from Jason Goepfert<\/a> who says "current indicators are as lopsided as they’ve been in the past few years".  In a run down of over 100 indicators, 26 are showing bullish, while only 2 bearish.<\/o:p><\/span><\/p>\n

Another contrarian play comes in the form of a member in my live chat room, who mentioned to me that his mom just called wondering when she should sell.  He received the same call in August.  What are you hearing from your family and friends?  Pay attention to the discussions at all the holiday parties and get a sense of how the "average" investor is feeling towards the stock market.  <\/o:p><\/span><\/p>\n

I do believe we’re close to a bottom, but when I say bottom I’m just referring to a tradeable rally.  Just how big this rally will be is anyone’s guess, but there will be some significant opportunities on the long side very soon.  What I’m looking for is some kind of big capitulation day characterized by some panic selling followed by some institutional buying and short covering.  Until that happens, I remain in a large cash position.<\/span><\/strong>
\n<\/strong>
\nWhen this market gets going again, you might like to take a look at these potential leaders<\/a>.<\/span><\/p>\n

::: Major Indices Performance – The Numbers :::<\/strong><\/font><\/p>\n

(Note: volume averages are based on the average over the past 50 days)
\nData as of 4:00EST – End of Day November 26th 2007<\/font><\/p>\n

Nasdaq: DOWN 2.14% today with volume 10% BELOW average
\nNasdaq ETF (QQQQ) DOWN 1.73%, volume 8% BELOW average
\nDow: DOWN 1.83%, with volume 6% ABOVE the average
\nDow ETF (DIA): DOWN 1.51%, with volume 23% BELOW the average
\nS&P ETF (SPY): DOWN 2.21%,  with volume 9% ABOVE the average
\nRussell Small Cap ETF (IWM): DOWN 2.72%, with volume 8% ABOVE the average<\/font><\/p>\n

::: SelflInvestors Leading Stocks :::<\/strong><\/font><\/p>\n

The Self Investors Leading Stocks Index is comprised of stocks in the Breakout Tracker, which is a database of the fastest growing companies near a breakout or having already broken out of a base.  Leading stocks actually fared relatively well today, dropping less then all of the major indices with little conviction behind the selling.<\/font><\/p>\n

Summary:<\/font><\/p>\n

* Decliners led Advancers 225 to 78
\n* Advancers were up an average of 2.08% today, with volume 28% ABOVE average
\n* Decliners were down an average of 2.62% with volume 9% BELOW average
\n* The total SI Leading Stocks Index was DOWN 1.41% today with volume 0% ABOVE average<\/font><\/p>\n

::: Where’s the Money Flowing :::<\/strong><\/font><\/p>\n

Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes be misleading.  The only way that I know of to gauge industry\/sector strength WITH volume levels is through the analysis of ETF’s.  A couple years ago this was not possible, but as more traders\/investors use ETF’s they become a much better tool for gauging the health of the market and seeing where the money is flowing (or not flowing).  Using the proprietary SelfInvestors Demand Indicator score which measures price and volume movements, I’m able to quickly see which sectors\/industries are seeing the greatest inflows of cash.  For a detailed look at how I go about gauging sector\/industry strength please see the following post: http:\/\/selfinvestors.com\/si\/industry_tracking\/<\/font><\/p>\n

* Current Leading Sectors\/Industries (over last 30 trading days): 
\nBonds, Commodities, Agriculture
\n                                          
\n* Current Lagging Sectors\/Industries (over last 30 trading days): 
\nSemis, Retail, Internet, Tech, Utilities<\/font><\/p>\n

* Today’s Market Moving Industries\/Sectors (UP):
\nBonds across the board<\/font><\/p>\n

* Today’s Market Moving Industries\/Sectors (DOWN):
\nREITs, Real Estate, Energy, Financials, International Real Estate<\/font><\/p>\n

::: Stocks :::<\/strong><\/font><\/p>\n

The stocks section will be an area where I highlight one stock selected from a group of stocks moving up with volume well above average and most likely breaking out of a base or consolidation.  Sorry, no stock of the day today but you might like to have a look at the following Self Investors Leading Stocks that moved up with volume today and are above the 50 and 200 day moving averages.  These could be your next leaders once the market turns.  <\/font><\/p>\n

Listed in order of total rank (fundamentals + technicals) with the best at the top.<\/font><\/p>\n

Arena Resources (ARD)
\nFossil (FOSL)
\nVimpel Communications (VIP)
\nAstronics (ATRO)
\nDolby Laboratories (DLB)
\nDynamic Materials (BOOM)
\nStanley (SXE)<\/font><\/p>\n

 <\/p>\n

<\/o:p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

As an indication that we are far from bull market trading where bad news is brushed aside and any glimmer of good news is a catalyst for a rally, the early positive tone from strong Thanksgiving weekend retail numbers gave way to more financial doom and gloom and a rush to the equity exit door.  Citigroup layoff rumors, UBS downgrades of … Continue reading Contrarian Indicators Show Tradeable Rally Imminent<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-881","post","type-post","status-publish","format-standard","hentry","category-weeklyafter-stock-market-review-archives"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts\/881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/comments?post=881"}],"version-history":[{"count":0,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts\/881\/revisions"}],"wp:attachment":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/media?parent=881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/categories?post=881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/tags?post=881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}