The Daily Trading Report

Over the course of the last few weeks I have been saying that the equity market is not behaving in the manner it should be if this was the start of a “genuine” bearish phase as opposed to a conventional “cleaning out of weak hands” (or correction as it is commonly referred to). It seems that those who were bulls in March/April had absolutely no problem in crossing the great dividing range between the bullish and bearish camp. Bull markets typically come to an end with the bulls refusing to throw in the towel, this creates what can be described as a churning action in the major market indices and a gradual beakdown in the breadth of the market. Looking at our traditional measures of market internals or breadth we do not see evidence of churning or a gradual rollover. As at the end of April the NYSE AD Line and New High New Low Index were registering multi-week highs with no apparent loss of momentum. Yes we do see the weakness………….but do you get bearish over a mere three weeks of negative behaviour in market internals? We think not.


The weakness we have observed over course of the last few weeks in the major market indices is nothing more than the market’s attempt to keep Joe Average investor poor………as such this weakness should be seen as a buying opportunity rather than reason to sell.

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