: : : : : Over the past month the correction in the mkt has been lead by the SP500 and the Dow. Nasdaq has been outperforming during this correction. For example the SP500 broke its June lows intraday but the Nasdaq did not retest its June lows and actually held its 50 day moving average. In the past the bears (shorts) have been burned when this has occurs, during mkt corrections Nasdaq should lead the way down. Thanks to Ace for providing the data on the extent of the amount of shorts. This should/could provide a substantial short covering rally so one most be careful if they are betting on a fall.
: : : : : Also we are seeing interesting readings in the COT report for the SP500 futures contract. Small speculators have reduced their long position to 11 billon this is the lowest reading since 2003. The small speculator has been a good contrary indicator. Data provided via sentimentrader.com
: : : : Les is correct that the financials are an issue but if they are an issue at this time we shouldnt see the Nasdaq going to new highs. The issue with the financials will eventually impact the mkt. The question is when will it be? What I could see is over the next few months divergences between various indicies occuring. Those divergences will impact market breadth and will eventually put in a mkt top. Also those divergences will shakeout the bears one more time pushing down the short interest ACe is talking about.
: : : : If the nasdaq starts to lead the way down then I agree with Les but until then it is going to be diffucult to have a large correction.
: : : Be careful here- see 7/3/07 article below.
: : : http://www.financialsense.com/Market/wrapup.htm
: : More articles-
: : http://www.financialsense.com/fsu/editorials/laird/2007/0703.html
: : http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/07/02/bcncrunch102.xml
: See greater fool theory at the end of the article
: http://www.hussmanfunds.com/wmc/wmc070507.htm
Good article he Mr Hussman always writes interesting articles each week. But his last line I think is the most important. "The Fund continues to carry just over 20% of assets in precious metals shares, where the Market Climate continues to be quite favorable on our measures." Timing a mkt top is always harder then going long so even if the mkt is forming a top the gold shares would probably do better then any short we could put on, imo.