The Market Continues To Do Its Best To Disappoint; Stocks Setting Up In Nice Charts Are Disappearing Faster Than They Appear

April 8, 2009

Angry, shocking, stunning, upset, and alone. This is about how I feel right now after receiving word that someone that I grew up with for 18 years has had his sister committ suicide. I am completely angry and can not think straight right now. Therefore, I am not posting a commentary tonight and if Market Speculator or Author_Ego would like to take over they are more than welcome. I have just received word and this person was a sister to me growing up. I am very upset and ask for prayers to the family. It doesn’t make sense and hurts a lot.

F this market and spend more time with your family.

–Joshua J. Hayes

This market is not acting like a healthy market. High percentage pullbacks are hardly what you’d call appropriate consolidation. Although low volume tempers the decline, the large percentage declines indicate buyers simply want out of a stock in fear of further price declines. The market is influx and although we’ve move in a v-shape manner off the lows there is nothing out there that supports we can move much higher. Even history tells us we could have more lows like in the early 30s between 1930-1932 where the Dow Jones Industrial Average rose 20% 5 different times but fell more than 70% from its 1929 high. One thing is for sure, this market is throwing out mixed signals and it is prudent one remain patient and ready to strike.

Leading stocks held up relatively well yesterday, but still suffered a large percentage decline. There are a few stocks setting up in bases but they are not in abundance nor are they increasing in size. It is important to keep an eye on leading stocks because they are a tell where the market will be heading. If they begin signs of weakness, it spells trouble conversely they can signal more gains are to be had. At the moment, the leaders are mixed and not screaming for more lows or highs. This is precisely why it is important to remain cash heavy and not risk losing capital in a shaky market. If leaders begin to breakout, then we’ll be getting long and in a hurry. In the meantime, making “guesses” or “bets” how the market will go does not put the odds in your favor.

An improving stat is the New High vs New Low ratio. We haven’t see the large amounts of New Lows hit the market, but sadly there haven’t been too many New Highs. The overall picture is improving and a positive sign for the market. Remember, the NH vs NL is simply a secondary indicator and is far from being favorable for the stock market. When New Highs consistently beat New Lows by more than a 2 to 1 margin we’ll know something is turning around.

Another interesting psychological indicator is the VIX index. It has tightened considerably in 2009 and is looking to break up or down. At this point, it can go either way. The direction it breaks in will certainly foreshadow the power of the move the market will make.

Capital preservation remains the name of the game, cutting losses will keep you afloat when this market does turn around.

Our thoughts and prayers go out to Josh’s friend’s family.

Market Speculator

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