One day does not a rally make

A few thoughts to add to a Bearish colleague (Guy Lerner) said about today’s weak volume:

I thought the Internals were powerful, with A/D and up/down volume excellent. However, the Nasdaq volume was stronger Wednesday and Tuesday — than on today. And Volume is key to discerning what the institutions are doing.

I asked Jim Altucher to look into today’s big up action — he thinks its moderately Bullish — but I am not a big fan of the HUGE up days. The markets are much healthier putting together five 40 point days rather than one 200 pointer.

It has the whiff of buying panic to it, and that’s never any good for anyone.

Further, the market is not an Etch-a-Sketch. Everything the market was concerned about yesterday — Oil worries, inflation, slowing GDP, waning earnings momentum — do not disappear simply because we enjoy a huge up day!

That said, I now go on confirmation day watch: Days 4 to 9 from now where indices rally +1-2% on greater than average volume. Or, a return to the prior trading ranges which we have broken down from. Or as Guy suggests, a break fo the downtrend line.

While I am always ready to reverse a call when the markets require, I ask readers of the Bullish variety to maintain an open mind.

A few perma-Bulls have written chest pounding missives to me insisting that the March 29th call was wrong. You know I heard from a slew of them today again, telling me how wrong wrong wrong I am. Funny thing is, they’ve been pretty darn quiet for 700 or so points down. (What an odd coincidence that is).

I will try to put some charts together for tomorrow as to when and where I will become a Bullish believer again . . .

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  1. arkady commented on Apr 21

    the market is oversold. you can;t find anything similar in the last 3 years (look CCI in Qs)
    this is not a good entry point for breaking down 10,000 in INDU and 80 weeks moving average in S&P.

  2. barry3f commented on Apr 21

    you just lost me with your ‘long larry kudlow’ comment.
    hopefully i’m missing the irony

  3. james rapp commented on Apr 24

    O’Neill said the NYSE composite actually had its confirmation day on Thursday.

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