TomTheTrader .: (9/5/2012 20:41) Precedents for the month of September aren’t encouraging, plus we have some of the “too much optimism” indicators as mentioned in recent reports. It’s a very difficult juncture to judge risk, especially with prices that have flatlined for nearly a month. We wouldn’t be overly worried about a September decline until prices started to show more evidence of breaking down.
TomTheTrader .: (20:41) Precedents for the month of September aren’t encouraging, plus we have some of the “too much optimism” indicators as mentioned in recent reports. It’s a very difficult juncture to judge risk, especially with prices that have flatlined for nearly a month. We wouldn’t be overly worried about a September decline until prices started to show more evidence of breaking down.
TomTheTrader .: (20:41) According to Investor’s Intelligence, more than 50% of newsletters now expect the market to rise, which is the highest percentage in four months.
TomTheTrader .: (20:42) This isn’t a big change in sentiment; all of the new bulls since June are converts from the “correction” camp, not former bears.
TomTheTrader .: (20:42) The bullish percentage is still relatively low – the average bullish percentage when the S&P was at a 52-week high is 53.3% over the past 15 years, compared to the current 51.0%. On a related note, the Hulbert Financial Digest reported that newsletters’ average net long position was unchanged from the prior week.
TomTheTrader .: (20:42) Not that this is a surprise, but the S&P 500 has formed one of the tightest month-long closing ranges in nearly 50 years.
TomTheTrader .: (20:43) For what it’s worth, the market broke to the upside each of those times, gaining 2% – 5% over the next month.
TomTheTrader .: (20:43) News events will rule from tomorrows ECB BOE ADP data to Fri NFP and even the AAPL I-phone release and I-Print money machine gadget ?
TomTheTrader .: (20:44) A major positive is there aren’t many speculators like us that made it through the last decade with Funds to trade
TomTheTrader .: (20:44) This means some sentiment extremes may be over read
TomTheTrader .: (20:45) one area where there is no speculation
TomTheTrader .: (20:45) and a area that we will enter soon
TomTheTrader .: (20:45) is penny stocks
TomTheTrader .: (20:45) A few months ago, we looked at how speculative volume in April had surged, a troubling sign of excessive optimism.
TomTheTrader .: (20:46) How times have changed.
TomTheTrader .: (20:46) !!!!!!!!!!!!!!!!!!!!!!!!!!
TomTheTrader .: (20:46) By “speculative volume”, we mean stocks that are traded over-the-counter, commonly known as pink sheets or penny stocks.
TomTheTrader .: (20:46) These are low-priced issues that generally don’t meet the larger exchanges’ listing requirements.
TomTheTrader .: (20:46) The May/June correction really seemed to have knocked the wind out of these traders. Pink sheet volume has declined every month since March and is now the lowest in over 15 years.
TomTheTrader .: (20:47) This was a major worry….many including Mark Hulbert believed that we did not correct enough to keep going and has called for a correction
TomTheTrader .: (20:47) He may be wrong …for now …..
TomTheTrader .: (20:48) Using total share volume, penny stocks haven’t traded this few shares since 1998, other than a slightly smaller amount in July 2000.
TomTheTrader .: (20:48) Using the number of transactions, we haven’t seen this slow of a pace of trading since September 1996. Yes, 1996.
TomTheTrader .: (20:48) 17 years !!!!!!!!!!!!!!!!
TomTheTrader .: (20:49) There were only 226,000 trades completed in August, which is down from more than 650,000 earlier this spring and more than 900,000 at the end of 2010.
TomTheTrader .: (20:49) Overall market volume was low in August, but even accounting for that fact, pink sheet volume was strikingly low. Speculative volume was 48% of Composite volume in August…compared to 230% this spring
TomTheTrader .: (20:49) historically, such a dive in speculative volume has been a longer-term positive for stocks.
TomTheTrader .: (20:49) We are now stuck to the news cycles for a week
TomTheTrader .: (20:50) will the USA get a break …we will rally 1st then selloff …or selloff then rally …either way the bull will continue for years to come in this traders view
TomTheTrader .: (20:50) TTT Thanks you for being here and Good Luck Mr Draghi !
TomTheTrader .: (20:52) We are leveraged long Short term and long term
TomTheTrader .: (20:57) I still expect a 3-8% correction before Sept 21st ..but from where ?