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Comments

Now that the DJIA is literally in uncharted territory, it is useful to use other
Indexes to find a level likely to cause a temporary pause.
To get a perspective go to:
http://wrahal.blogspot.com

What does this suggest for possible downside?

Shrek,
We did a strategy piece on this a few weeks ago for our Mini Institutional clients, and I'm currently working on an update. With sharp gains like the one we are currently experiencing we've found that the market historically declines -6.6% on average. This figure is only taking instances where the market has gone up, the universe does not discriminate against those that followed a correction.

If you sign up you can access all of our more in-depth research publications and information through our website. Feel free to send me an email at: crueckert@birinyi.net

It would seem rather tough to correct ~6% given the current record short interest, continued put buying, and massive cash....but obviously anything can happen.

short interest is high because hf's use as a tool with other derivatives like options. So I wouldnt interpret it as bearish. I think the angle of the incline suggests that a 6 percent correct is very real and who know how bad intraday it could get.

I would also like to point out that at it's current level the S&P is about 8.3% above it's 200-Day moving average.

If you would like more detailed information I would encourage you to sign up for our Newsletter, released on May 30th, or our Mini Institutional service where you will receive multi page bulletins concerning just this type of information.

Thanks Cleve. I reall like this site, but I can't do it right now. I'm going to go out a limb and say that the indexes start to encounter very serious problems when they get much further than 8 percent away and a suprise isnt far off.

The comments to this entry are closed.

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