Like Keith Olberman talking up Obama or Sean Hannity talking up Bush, mutual fund managers are applying maximum spin to get the public to part with their cash. I love it when one quotes the technicals, specifically how breadth is still strong. Yes, the advance-decline line is still OK and new 52-week highs beat lows but when we look at individual sectors we see the real story. Group after group has broken down. That is all we need to see.
I was accused of being a perma-bear during the latter half of the rally (basically missing July, which admittedly was huge) but in August I did get with the program. Why? Sector after sector was breaking out from technical patterns. Even though the total gains were muted I knew enough to stop fighting the tape.
Now, we see the opposite. Sectors are dropping like flies.
Check out this headline from MarketWatch mid-day Friday:
Early-cycle bird gets worm -As investors hunt for higher returns amid a “new normal” of reduced expectations, analysts point to early-cycle stocks as among those that stand to gain as Asian demand for goods picks up.
Nice fundamentals. Too bad the tape is saying just the opposite.
Thursday’s rally has been obliterated. It may yet turn around today and close well but the impetus for Thursday’s performance is gone. Something new will have to take its place to fire up the herd. What will it be? I’ll take suggestions.
