The Nasdaq 100, Full Of Big-Cap Tech Stocks, Leads A Mixed Market; Volume Is No Where To Be Found, After Weeks Of Huge Trade

August 22, 2007

There really is not a lot to say about yesterday’s market. I read once again that the Fed has injected funds into this market. Sheesh, I just think this is such a bad idea. I would rather see them knock down the Fed Funds rate than do something as silly as this. They may be able to prevent a crash, but if the market is going to fall the market is going to fall. There is nothing the Fed can do to stop what the forces of millions of investors control. The Fed, I hate to tell you, is not that powerful.

The other key sign underneath the market that tells me that we are no where clear of the trouble is that there were only 34 new 52-week highs to 92 new 52-week lows. Like I said before, there were more new lows than new highs before this selloff started and there continues to be more new lows than new highs. In 2003, before we reversed for good, there were more new highs than new lows and the Nasdaq had an accumulation/distribution rating of A-. So as you can see we clearly do not have the statistics underneath the market to support a sustained rally. Take that along with me having absolutely ZERO nice beautiful green charts and you definitely do not have a market that is ready to rally.

Are we probably going to continue to go higher? As long as RIMM AAPL BIDU FWLT and the other big cap technology stocks that make up the heavy weight of the indexes keep going higher, this market is going higher. However, if no other stocks participate, like what is currently happening, eventually they will get these leaders. For now, as they move higher, there is nothing for us to do. IMO, they are well beyond the proper time to buy after such huge gains for these stocks from the 2002/2003 lows. But with them still moving higher, there is no way in hell they are ready to be shorted. RIMM finally completing that 3 for 1 split might bring us close to a top but until we get a rollover, 200 dma breach, and then a failure at the 50/200 dma, shorting is purely premature and wrong.

This market probably has a lot more volatile chop and wild slop left for us to deal with. Especially with traders taking this week off as a clear vacation week. I can only pray that the rest of the week is not nearly as boring as today was. Aloha and I will see you in the chat room!!

Posted by Joshua Hayes | Filed Under Market Commentary