Monday, July 07, 2008
continuing market weakness
his comments on materials may be especially relevant to holders of DUG, though too late for KOL. demand destruction is on the warpath, and dr. steenbarger rightly (i think) notes that this means worries about inflation are misplaced. throw in mounting evidence for a global shipping slowdown -- reports from UPS, fedex and CMA CGM all add up.
the sentiment picture reminds me rather of january 9. the market then looked deeply oversold and set to rally -- but instead broke and cascaded into january 22/23. i turned bullish too early then.
UPDATE: this weakness-on-top-of-weakness has drawn the attention of rob hanna at quantitative edges as well in two posts -- here illustrating that persistent recent declines really have little parallel since the decade-plus of systemic deleveraging that was at its most powerful in the 1970s; here showing that such persistent selling is (on limited precedent) extremely bearish looking out as far as 20 weeks.