Wednesday, January 06, 2010

Dull, Dull, Dull

The title of this post speaks for itself. Frankly, I am very surprised that on the third day of the new year the market remains almost as quiet as it was during the last two weeks of December.

The fact that the market is narrow and dull and at the same time trading at new highs for the rally from the March 2009 low gives me pause. We have broken well above the 1080-1115 trading range, but no aggressive buying activity is evident. Experience shows that when the market gets dull after an extended move it is about to go into reverse. This leads me to believe that a break down to 1100 or even further is imminent.

Nonetheless, I am retaining my bullish bias. Any break of 30-50 points from here would only serve to shake out the weak longs and recharge the uptrend's battery. I still think that the ES will trade at or above the 1170 level before spring arrives.

12 comments:

khoekz said...

I completely agree Carl. I am short from these levels (long SPXU 34.24), and am expecting a pullback before we hit SP 1143. It seems we are just drifting upward. There should be at least a small correction from here. When it happens, the bears will say the end is here, and the buyers will once again buy the dips - at that time, the rally will continue.

Excellent post Carl, as is the norm.

Thanks

PM said...

Hi Carl,

There's an old say, "Never sell (or short) a dull market."

Thanks.

Kindest regards,

PM

janet said...

The adage never short a dull market...we had a big move up the beginning of the week. I see underlying strentgh in the market. Carl, can you confirm you got my check?

A W Frey said...

This is interesting to me as a MarketMinder.com editor. For a related story on this topic, see our commentary: Fisher Investments MarketMinder: Fisher Investments Looks Ahead

Wags94596 said...

Carl,

I would beg to differ about your comment regading the market being "quiet". D

did you not see the oil drilling, nat-gas, coal, mining, and commodity sector on FIRE today???

It's called ROTATION.

Carl Futia said...

Janet:

Yes, I did. Thanks for supporting this blog!

Carl

Loren Judson said...

"one should never sell a dull market short. That advice is probably right oftener than it is wrong, but it id always wrong in an extended bear swing...the tendency is to become dull on rallies and active on declines" - Hamilton (May 21, 1909), as quoted in Robert Rhea's "The Dow Theory: An Explanation of its Development and an Attempt to Define its usefulness as an Aid to Speculation" (1932)

Win said...

Thank you, Carl. Your warning is much appreciated. I was thinking that the Friday employment number would be the catalyst for a drop, but I will now remain open to a fall that begins sooner.

RBharol said...

"I am very surprised that on the third day of the new year the market remains almost as quiet as it was during the last two weeks of December."

Carl,
Do you seriously expect markets to keep going up in a single line? Even if they have to go up, there should be a correction. Markets are going up since dec 21st without a break.

Kishore said...

Win, I agree. Employment numbers have consistently been a catalyst for short-term reversals, up or down, during the entire rally from March 2009. As the market recently made a big move up (the Santa rally with continuation into the New Year), the Friday employment numbers could be the catalyst for a corrective move down.

nomind said...

Carl,
FWIW, junk bonds have started the new year with a bang; the first three days have been very strong. All eyes on the response to Friday's payroll data.

Adsense said...

carl
I think ifyou were to take an honest look at the market and think through some of lindsays work which is something i think you have failed to do for atleaast 1 year now , you should consider the following . according to lindsay many bull markets begin with the 3 peaks domed house patterns and even though you discount the 10 yr pattern as valid you have to resepect that it was textbook from 1997 to 2009
in terms of its pattern . if we are seeing a normal version then we should be at or close to point 3
if so then an 8 month sideways trend would fit and if that was to take place then a subnormal decline lasting 235 days from point 7 would also fit in terms of a cycle low around may 2011 .
to add to this the benner business cycle does point to a high this yr 2010 . many things to consider
there is a few problems with this though in terms of bull market times spans but the overall does make sence. my bias is a sideways trend into at least mid march and then a move upwards into august
but down and up might mean just more of the same which is sideways
hence trading the swings is what is important .
joe