The total put/call ratio came in today at 1.03 once again indicating a healthy dose of pessimism which is also causing the 10DMA to rapidly climb. But, on the negative side of the ledger bonds remained weak today and tech lagged but hey, the world can never be perfect.
The conditions of the market remind me a lot of what happened in June....
1) the market rolled over from a top,
2) there was a rally attempt that failed quickly
3) then the second rally attempt which came from a lower low succeeded for about a week. Then in early July....
4) the market rolled over and made yet another lower low from which the true bottom was made which led to a rip roaring rally to new highs
Compare this to what we've seen so far recently. We rolled over from a top, we saw a rally attempt fail quickly and made a lower low and now we may be on verge of seeing 3) play out which still leaves 4)...a lower low sometime down the road.
You can see on the charts below the behavior of the market and key indicators in June and what has transpired recently.....notice the similiarities.
Let's be careful here now....the past rarely repeats the exact same way in the futue although it often rhymes and so I wouldn't get too hung up on the notion of a June-July rerun but it does fit given the extreme reading of the oversold/overbought indicator registered last week. As I said before, in the past whenever such extreme oversold readings were registered it led to a good rally followed by either a retest or lower low in the market....I believe there's a very good chance we may be at the "good rally" part.
I'll make a quick post tommorow morning to confirm if in fact the rydex data showed a rush back into money market funds which I believe happened.
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