Fear, But No Panic, at the Market Disco

by: Brett Steenbarger posted on: July 06, 2008 | about stocks: DIA / QQQQ / SPY    
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The Dow has been moving to bear market lows and the number of NYSE common stocks making fresh 52-week lows has taken out its March peak, but so far investors seem to be seeing this as more credit-related sin than tragedy. I've mentioned in the past that there have been spikes in traffic on my blog at recent intermediate-term lows (August, November, January, March). No such spike has yet occurred during the market drop.

OK, maybe it's just summer doldrums in blog traffic. Maybe my readership has deserted me at the altar of the blogosphere. Still, let's face the data with a sense of poise and rationality. As the chart above notes, the American Association of Individual Investors poll has also shown spikes at those prior market bottoms. We're now seeing an elevation of bears in the poll above the 50% level, but the bearishness is more muted than in January or March.

We're also not seeing the January or March levels of bearishness in the equity put/call ratio, and surely no panic has hit the disco in the VIX, which remains below the 30+ level seen at those prior market lows.

Perhaps we'll yet successfully test the March lows in the S&P 500 Index and, technically we can be saved and pour the champagne. For now, however, I note the continued decline in the advance-decline line of NYSE common stocks to new bear lows and the continued decline in the cumulative NYSE TICK and I'll stick with poise and rationality: my door remains closed.

This article has 4 comments! Add yours below...
Brett Steenbarger

Brett Steenbarger

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This article has 4 comments:

  •  
    jjason
    Jul 06 10:35 AM
    Brett,

    How about working to bring down the price of oil? Did you read the excellent article by Ed Wallace? It's at:

    http:star-telegram.com/ed_w...

    Professor Michael Greenberger's report to the Senate Committee is also a must read at:

    www.commerce.senate.go...

    As oil prices effect the prices of everything else we will see more hardship for everyone in the US.

    Do something now. Complain to Congress. Stop commodity speculation in oil and other commodities.
  •  
    optionsgirl
    Jul 06 01:36 PM
    This is not commodity speculation and an oil bubble. The value of commodities will continue to increase. You can thank your wise politicians for backing biofuels that should be food, looking to tax companies engaged in oil and gas exploration and development, and the Fed for articifically lowering interest rates while increasing the money supply. If you think riding to work on a bicycle is going to make a difference, you need to look globally.
  •  
    optionsgirl
    Jul 06 01:37 PM
    ps- you can also thank Nancy Pelossi and her ilk for their anti-nuclear and anti-coal stance. You elected them, are you happy with the results?
  •  
    Kunst
    Jul 06 03:40 PM
    I highly recommend jjason's two links above. Pull them up and read them -- they are well worth your time.
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