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Thursday, February 29, 2024

Brett’s Thoughts

A Few Thoughts About the Current Stock Market Weakness


1) Fear is on the rise – The traffic on my blog has been a very good indicator of trader worry…

2) A lot of stocks are not making new lows – We made fresh bear market price lows in the NYSE Composite Index and the S&P 500 Index on Monday. In spite of that, only 210 common stocks made fresh 52-week lows in the NYSE Composite universe, versus about 450 in July and over 700 in January…

3) A lot of financial stocks are not making new lows...

4) The housing stocks are not making new lows…

5) We’re oversold – My Cumulative Demand/Supply Index measure fell below -27 on Monday, moving it into oversold territory. When the Cumulative DSI has fallen below -25 since July, 2003, the next 30 days in the S&P 500 Index (SPY) have averaged a gain of 2.42%, with 96 occasions up and only 19 down. Across all other market occasions, the average 30-day gain has been .49% (704 up, 462 down). This fits well with the average 30-day gains following occasions when we’ve had more than 3000 stocks making fresh 20-day lows.

5) I’m not buying yet – A valuable piece of advice from my days living down south was to "dance with the one that brung you."...

6) Afterthoughts – Had a nice phone conversation with Jon Markman last night; he referenced Paul Desmond of Lowry’s Reports in observing that selling does not make a market bottom; buying does. Great point. We only get a bottom when large market participants perceive price to represent value. Not there yet. Here’s Markman’s latest take on the market

More here.

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