Our morning comments

Our morning comments:

Yesterday's activity continued to reflect the continued lack of interest on the part buyers. Internals remained negative with decliners besting advancers, down volume outpacing up volume and new lows beating new highs. The only bright spot on the day was that volume also was sub par, most likely a reflection of the holiday season. However the low volume is probably also indicative of the general lack on interest in stocks right now by the investing public.

So overall we stand not much different from where we have been over the last several weeks. To summarize we have a market licking its' wounds (after a tremendous fall) yet it hasn't shown the ability to rally with any conviction. Conversely the pervasive selling has dried up (yet we still can't pop). On the other hand we have bad news after bad news on the economic front as well as the main pages (ie. Bernie Madoff story) yet the market has actually absorbed the bad news and not really gone lower (typically a positive sign). That said we still can't make any headway. It is enough for an investor to want to pull his/her hair out (if you're follicly blessed that is !)

The answer to where we are right now is simple - nowhere. With year end approaching and hopefully most off the tax loss selling done no one really wants to make any major bets until 2009. There are times when the market is directionless and this is just one of those times.

The good news is we won't stay directionless forever and when we do make a move it will be sharp and aggressive. The two possible outcomes will be as follows: (A.) We have one more aggressive sell-off that purges out the last of the selling and makes for a mega buying opportunity or (B.) we simply see a huge surge in up to down volume and advancers to decliners (simultaneously) from present levels and we get a violent rally from here. Either way volume will give us the clue as to when all the key players are back in the game. Remember volume levels equate to confidence and conviction and once the market is comfortable that the global economic bailouts and stimuli are working you will see a tremendous pick up in volume and that will be the key. In the interim if you are in the game keep your bets light (since the odds of winning are lower in a directionless tape) and watch and wait for the right hand (ie. explosive market internals) before you go all in.

Happy Holidays To All From The Staff At FusionIQ !!


posted by Peter Greene