
So you get home today to find that the Dow closed up 287 points, the NASDAQ up 36, and the S&P 500 up 34 points, but what does it mean? Today's rally was a very interesting rally, and truthfully not that impressive of a rally when you look at the internals. The headlines will look great, but those who look into exactly what happened will have to question this rally. ![]()
The all-important advance decline ratio tells the tale of today's rally. On the NYSE advancing issues were 1,733 and declining issues 1,568. On the NASDAQ, amazingly declining issues outpaced advancing issues 1,626 to 1,452. The up versus down volume ratio was not that impressive either, with about 2/3 of overall volume being up and 1/3 down volume. If you recall on Friday, the down volume was over 90% of overall issues traded. Clearly, today's advance did not have the conviction that Friday's decline had.
What are you to make of this? It tells me that today's advance was narrow, and that people are not convinced we are done going down just yet. The rally today was likely more of a snapback rally than anything else. It is actually quite amazing that the rally today took the market so much higher given that tommorrow is the FOMC policy statement at 2:15, which the market generally waits on.
I am on the sidelines, just watching and waiting until this market figures itself out a little bit. I am still long several individual stocks and some mutal funds, but I'm sitting on more cash than usual, waiting for the opportunity to put it to use. Tonight when you see the headlines of a huge stock rally, remember that this was not broadbased, and there very well could be more large down days in the near future. The FOMC policy statement tommorrow will drive the markets in the short-term.






» Wall Street rally, but where's the conviction? from BizzBites.com
The markets rallied today and regained a lot of lost ground. A closer look at internals finds the picture not so rosy. What should you do? [Read More]
Tracked on: August 6, 2007 3:29 PM | Permalink to Trackback