Weekend Round Up, This Is a Tough One

{+++} So David Tepper has cooled on stocks (mostly an overreaction in my opinion). He still owns stocks and its not like he purged himself of all equities, he is just very cautious and its hard to blame him.

Ralph Acampora, one of the most respected technical analysts out there, sees 25% down in the Russell and Nazzy and 10% down from here in the Dow and S&P. This he thinks will happen soon, but he expects a big move higher around October or November.

Ralph is a reactionary, and I’ve seen him go from bullish to bearish and back again over the last six month. I worked with him back in the day at Kidder Peabody and he flip flopped a lot. In trading it’s OK to change your mind though.

I was less confused during the crash, and when Europe was falling apart, then I am now.  I never listen to the pundits, I see their lips moving, but it doesn’t ever form my opinion. I do all my own work and I am just as capable as being right or wrong as they are.  Most of them are writers or journalists and have never been in the trenches.  They are very good at inserting themselves in the media though. You guys should all know this by now.

I can see a short term bounce here, mainly in Russell and Nasdaq, obviously because they are the most oversold. After all, the Russell is down about 10% from its high and nothing goes straight down.

The Nasdaq held some uptrend line support last week, but gun to my head, I fee it needs to go down and test the 200 day moving average at the very least. I base this solely on the charts.

My theory on why short term higher rates could be bad, not good for stocks.

Because bonds are rallying and yields are going lower, the market is rushing to bond type equivalents. You know, things that pay a dividend.  That’s why the Dow and S&P stocks have been holding their bids while Nazzy and Russell go lower. The latter don’t pay dividends, very small if they do.

Stocks like T and VZ are making a comeback of late. You can grab 3-4% there. The 10 year note pays you 2.50% This is only a theory, but if bonds do weaken and rates rise, the case could be made for an exit in the S&P and Dow stocks as they finally decide to follow Nazzy and Russell lower.

Just a theory, and right now there are no shortage of theories. If you are a believer that the S&P and Dow are being held up for this reason, then you can make the argument that they will eventually follow the Russ. and Nazz lower.

I found something this week that was interesting, and I wasn’t aware of it at all. Did you know that a 10% correction has almost become an annual event now for the Russell?

You can see it here in the link. Interesting.

Enjoy your Saturday. I will release the weekend video later or tomorrow.





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