The Archives

Looking a the chart below you can imagine this year’s stock market getting back on the 2009 trend line,  leaving the 2003/2004 correlation behind.  But I’m still betting that the market is in a sideways mode, rather than a continuing raging bull.

The most notable change in the curves since my last update on the 18th of March  is the big drop in normalized volume–something we didn’t have till the Summer of  2004.    Volumes have been low recently, so this drop-off isn’t surprising.  If the 2004 pattern holds true, the 30 day moving average of volume will drop during rising prices, and start increasing a couple weeks before rallies occur.

This bull run has been going on since the 8th of February.  A very long time without a correction in these uncertain times.   In watching the market action I have been surprised at the down days.   In-spite of the late January scary correction and market shocks that I would expect to send the S&P 500 down a percent or two, the market has shown remarkable resilience.

In conversations with my friends, most of which are not active traders, I have noticed a pattern. Most of them are out of the market, expecting a double dip recessi0n.   Perhaps this is the overall situation.   Overall there are a lot of bulls remaining, but for the most part they are buy and hold types, not trying to time the market.   Are the people that are likely to get scared after a long bull run-up and sell on scary days already be on the sidelines?    If this is the case this market might have some upside left in it.

250 Days of SPY, click to enlarge