OFF LAST WEEK’S UGLY, NEAR-TERM POSITIVES…BUT JUST NEAR-TERM

Our proprietary sentiment indicators are off the charts, shorter-term bearish…which is bullish. When too many get scared AFTER a drop, it usually gets us close to a bounce. But other things we are seeing may be at work:

Notice the TRANSPORTS again look to be holding the longer-term 200 day. TRANSPORTS are not leading but they look like they are holding and due ot bounce.

The NASDAQ/NDX is right on and at the 50 day average…and suspect we also bounce there…for now.

BIG FINANCIALS are now on the 50 day…but keep in mind, regionals and such (KRE) act awful.

While the RUSSELL is weak, it is also down to the 200 day, a place where it could bounce.

While we are not big on the VIX, let’s just say that spike to the upside is overbought.

Now onto the bigger picture which is less than thrilling:

Instead of it being a 60-40 market, we think it is now 50-50 at best. Last week’s action did more damage.

There continues to be an inordinate amount of blow-ups considering we are just off the highs.

New highs have been pitiful while new lows have expanded past new highs. Again, this is occurring just off the highs.

Underneath the surface, internals have worsened. At the very least, watch them bounces. We will be able to tell a lot more by how strong or weak the bounces will be.