July 7, 2010

Equity markets opened up, stayed strong and closed strong. Big 3% move. No apparent news to account for it. Volume pretty light and computers ran it. May be shorts covering, oversold bounce, or preparation for earnings season.

Short-term: 2 green 2 yellow lights – tending yellow/green

Intermediate-term: 2 yellow 2 red lights – tending yellow

Stock targets: 12% swimming (mostly deteriorating); 19% trading water; 69% sinking

Strongest short-term readings since June 15 so market is definitely in bounce mode. Biggest problem is that there are far fewer individual stocks that are still swimming than in late May and early June. This is not an indication of a bottom. More an indication of an oversold bounce. And indeed, today’s action led to ZERO technical improvement among any individual targetted stocks. Today’s rally was entirely top-down and index-based. Any bounce is likely to be more concentrated among fewer companies and much more choppy than the June rally. Or completely unpredictable by me. Still – a good opportunity to troll among the few targets that are still swimming to see if they may still have a tradeable bounce going.

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