June 20, 2011

Short-term: 3 green, 1 yellow
Intermediate-term: 1 yellow, 3 red
Composite: Bearish but improving

A top-down technical bounce is under way. Looks like the institutions either a)did not need specific news of whatever happens re Greece or b)they are buying now to sell on the news later. That, combined with the technical investor crowd (lots of stocks around 200 day average) means that this bounce is sustainable for a short while. How long depends on how it broadens out.

By top-down I simply mean a market that is driven by the institutional need to deploy cash into asset classes via indexes. The indexes drive the individual stocks vs the stocks driving the indexes. This also means the continuation of “everything is correlated with everything else” and there is no reward for effort devoted to fundamental analysis.

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