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Market Recap: My Skepticism Proves Correct

July 28, 2008 9:23 PM

bullfrog.jpgI have no been much help the last 2 weeks as I simply did not believe in the rally. I strongly suspected it was a short covering rally due to the financials earnings that were above “depression” levels and the emergency rule put in place to stop naked shorting of the large financials. Could the move kept going? Yes. Anything is always possible. But without firm lows in the SP I just did not think the move was “justified”. In addition, if and when the market turned, where was the low? There was no rejection of a low on the SP, so a “probable” buy point did not exist. Why did the market close at the low of the day today? What was there to stop it? Nothing, as I have mentioned. Therefore, I just hard to wait it out and look like a dummy until proven otherwise. It does get frustrating as I created the site to “maybe” provide some insight as to what appears to be going on, and then the market makes a big move that I considered completely irrational.

With all said, where now? I mentioned last week, if we had seen the lows ( I still believe otherwise) then the SP should try and reverse above the Dow low. I still believe that is likely the case. If it does, then that could provide at least an intermediate low. I still believe the SP needs to clearly reject a new low to have any confidence here longer term. But we should get an attempt to hold the line not much further below.

This market still strongly smells like a meltdown type of market where a capitulation low never happens, just failed rallies with lower lows and lower highs. AKA “the 70’s”.  Something I have referred to many times as “bullfrogging”.

Written by Tom@StockBlade.com · Filed Under Pre-Open 

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