Market Sentiment, Aug 13, 2007

confusion still reigns supreme

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Indicies:
Well, I thought that the Russell 2000 would lead us to the promised land. Luckily I did not come out and call for the bottom over this past weekend. Today, the Russell sold off for most of the session, so it is unlikely that they will provide leadership to rally out of the hole. It would seem that the divergence between the Russell and the other indicies is now weak at best. There is still some positive divergence, but after today's action, it certainly is no longer as convincing. The best looking index today was the techs (QQQQ), and even they broke down at the end of the session.

Sectors:
SMH, XLF, IAI, GDX, XLE, they all sold off for the majority of the session. Since no one is stepping up to the plate to provide leadership, that would imply we are either going sideways or heading back down for a retest of last week's lows.


Tells:
IBM, AAPL, GOOG, RIMM, MA, ICE, GS all started gapping up in promising fashion, but sold off for the majority of the session and ended up looking anemic. Same theme - no leadership.

Indicators:
The BPCOMPQ actually increased today despite the weak price action of the Q's. It is still in oversold territory, and the techs would have to rally for a few days in order to take it out of oversold conditions. And since I just implied that no one seems to be willing to rally out of the hole, we could see the BPCOMPQ remain in oversold territory. Things can and do change in an instant, so we'll just have to wait and see what the market shows us.

The BPSPX looks like it is putting in a double bottom, which is a more encouraging divergence. But it too remains in oversold territory, so everything I said for the BPCOMPQ would also apply to the BPSPX.