Yet another gap down and flatline day....burned bears acting differently now

I've mentioned ad nauseum that this type of action is corrective, not indicative of a trend change. Recall how we saw the opposite type of action occur last year whereby we would get these gap up and flat line days whenever there was some sort of bailout, emergency rate cut, ect.

But something potentially quite ominous occurred today. The Ratio of NASDAQ vs. NYSE volume actually spiked today from already high levels to 2.4. Recall how I mentioned that this is a contrary indicator signaling the ratio of speculation seeking behavior to safety seeking behavior. I mentioned last week this ratio was already quite high but now this ratio is right were it was when the bull market peaked in October 2007. Unfortunately I'm unable to copy and paste the chart. This ratio has been pretty good in identifying IT tops and bottoms when at extremes and there's no doubt about it now that it's at an extreme.

I've also noticed some of the burned FAZ bag holders on stocktwits used this opportunity today to sell off some of their FAZ for big losses (as they admitted to doing). FAZ is also dropping on the top tickers list like I mentioned before. From experience I've noticed that when people sell off a dog they've had for quite some time after it gets a decent pop, it usually ends up being the wrong decision....sometimes not initially but eventually. We saw this happen when investors sold into the initial rally in March (and now of course after the market rallies 35% we've seen mutual fund inflows come back in a big way). It's quite common to see retail investors dump a dog they've owned the first rally of a trend change. I suppose they don't feel as bad about themselves knowing that they sold into strength.

The economic news was disappointing today, in particular the NAHB housing index which came in at 15. It was at 16 last month and 14 the month before. These readings are still very low historically and although they may have bottomed in November they aren't bouncing in a meaningful way. I was actually expecting to see a further rise in this number but didn't which made me stay on the sidelines.

Are we just seeing an economic dead cat bounce here that has ran its course or is it too soon to tell? I really don't care. I'll take my cue from the market and the expectations of investors/traders (i.e. fading them).
Evidence that we are close to or already made an IT top continues to build but right now the market is oversold enough on a ST basis to bounce so beware. It's always tough to play the market when it's IT overbought but ST oversold. Pick your spots and be careful out there.....I’m not so sure what I’m going to do just yet. It’s likely today’s gap will get filled….I just don't have a good handle on whether if it will be lower prices first.