A Tale of Two Lists

 | Nov 16, 2012 | 6:00 AM EST  | Comments
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I am a list maker.

I make shopping lists. I make to-do lists. I make stock lists. Each night when I do my statistics I make a list of positive and negative indicators. I even buy steno pads in bulk because they have the line down the center of the page so that my lists are separated. And yes, I do wonder why they still make steno pads. Does anyone take dictation anymore?

With that as background let me share two lists I made on Thursday with you. The first list was rather depressing so let's begin with that one. It's a list of all that is "wrong" with the world.

  1. The Mideast is in turmoil and it appears to be worsening, not getting better.
  2. China has a new leader and its economy is still rather iffy.
  3. Europe is officially in recession.
  4. The U.S. has the fiscal cliff and a Congress full of politicians who would rather be dogmatic than practical.
  5. Folks stopped hiding in bonds a few days ago.
  6. Folks stopped hiding in gold a few days ago.
  7. We top-ticked on the Fed's QE announcement in September, so the realization is setting in that the Fed cannot pull another rabbit out of its hat.
  8. Apple (AAPL) is actually a market problem now. It's the old live-by-the-sword-die-by-the-sword-situation. Too many owned it going up and too many own it going down.

Now here's my list of indicators:

  1. We are oversold. If we don't bounce before Tuesday, we will be maximum oversold by then.
  2. The 30-day moving average of the advance/decline line will be back to oversold by the end of the day on Tuesday as well.
  3. The what-if for the McClellan Summation Index is over +4000 (see yesterday's column for a full explanation of this indicator).
  4. The Transports have not made a lower low, yet.
  5. The put/call ratio went over 120% on Thursday, but the 10-day moving average of this indicator is not at the point where we typically get a decent market low, it is only heading there.
  6. The number of stocks making new lows expanded yet again.
  7. Sentiment leans bearish. A few more down days would get it to an extreme.
  8. The VIX refuses to get jumpy.

To sum up those two lists, the news is downright awful. The market is oversold. Sentiment leans bearish, but is far from panicky. There are no positive divergences. 

The standard routine is a bounce and another trip down to retest. So far, we can't even get a bounce that lasts longer than 10 minutes. I think we should bounce sometime next week, but I must admit I don't even know what sort of news could rally the market. I tried making a list and came up empty handed. I am open to suggestions, so shoot me an e-mail if you have any. The only thing I came up with was my mother calling asking if she should sell.

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