Stocks Move In Bullish Fashion, Are We There Yet?

There seemed to be two sides to the Market on Thursday.  One side you had Lehman (LEH) and Merrill Lynch (MER) the other was everything else.  LEH and MER took tremendous hits to their stock prices on Thursdays, no question it was due to their ability to survive as stand alone entities.  The other side performed quite well once the initial shock of the mornings trade wore off.  There is an overwhelming negative sentiment seen by the II and AAII Bull and Bear surveys it was almost impossible to continue the slide further.  However, sentiment reflects feelings about the market and not necessarily the actions taken by those who were surveyed.  At any rate, we bounced higher on higher volume on the NASDAQ (^IXIC) and lower on the NYSE.  We should see continued strength but at best it’ll be weak.

Volitility indexes, put/call ratio, and NHvsNL are not signalling we’ve hit our ultimate bottom.  These numbers are saying we haven’t bottomed yet despite what Jim Cramer and his followers might have to say.  There is no doubt CNBC will be ushering in bottom callers from far reaches of this country trying to get you to buy the feces that is falling to the floor.  We are simply not close to a bottom, short term we may but starting a new bull market here is highly unlikely.

From early 2003 all the way to Oct 31 of 2007 we had a bull market, we simply do not pull back for a year and are ready to move higher.  However, IBD research has shown if a bear market lasts more than 6 months it will last at least 2 years.  In the meantime, those who will follow Cramer and the talking heads on CNBC will burn and churn their account.  When the next bull market appears they’ll be left battered, bruised, and without capital to jump on the new rally.

I am prepared to sit on the sidelines as long as it takes, it may seem crazy but it its the right thing to do.  Stocks are not positioned to race off into new high territory, there isn’t enough leadership to take the market forward!

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