Dai minimi di metà luglio i mercati azionari hanno in genere recuperato poco più di un terzo di quanto avevano ceduto nell’ondata bearish that they had been overwhelmed in the previous two months. The rebound, which started with the ferocity of a typical short covering rally , then lost in intensity to the persistence of serious doubts about the prospects of the real estate and credit and, more broadly, a global economy in progressive deterioration. Although, in recent days, a new upward trend has come from the precipitous fall in the price of oil and raw materials in general.
As I will show in other posts in the coming days, my perception is that the fundamentals in recent weeks, have worsened and that a certain part of analysts and market participants continue to cultivate dangerous illusions . The worst is not past, nor in real estate or in that of the credit. While crisis, which started from the U.S., ended up investing in full globalize Europe sparing Asia.
If a few months ago, the Federal Reserve was still able to promise a gradual recovery in the U.S. since the second half of the year, now the uncomfortable feeling that his way is that instead of the last leg ' U.S. economy - the ' exports - is gradually eroded the international situation that tarnishes and lengthens the list of countries on the brink of recession : In addition to the U.S., Britain, Spain, Italy, Germany, France, Japan, Canada ... in other words, all the major advanced economies.
Here, however, I would leave out the fundamental analysis and confine myself to take a look at quality, in terms of technical of the stock markets rebound from the lows of July. As I said before, let me quote one of my favorite analysts, Brett Steenbarger , and his wonderful blog TraderFeed .
In a post
published yesterday, Steenbarger looks like a new high mark made by some indices, such as' S & P 500 the Nasdaq and the Nasdaq 100 , not been accompanied by an expansion the number of securities that - in several U.S. markets (New York Stock Exchange, Nasdaq, American Stock Exchange) - have recorded new highs ( New High ) in the last 20 days.
The following is a chart that compares the performance of the S & P500 with the New High. As you note, the number (in blue) has been decreasing steadily.
addition, when Yesterday's U.S. indexes have gone beyond previous peaks in the previous week, to participate in the rally were only a few sectors, while has been apparent absence of the two sectors in the last year have been driving the market downward, namely financial and real estate .
Steenbarger The conclusion that one gets is that, until now, the rebound from the lows of July is not convincing. Both in the areas of securities, participation upward is selective and, in general, too small to inspire confidence.
In other words, when the market moves upwards, in the latter weeks, it behaves like an army where the troops are reluctant to follow the general. It is a condition that had already highlighted in a post in mid-May, and then, along with several other considerations, led me to conclude this:
"The rally from the lows of March, apparently as lively in going price index, was indeed feeble and fragile. It is this pulp that are made early in a new bull market, which are full of pent-up energy [...] The situation can change. My analysis is certainly fallible and incomplete. But at the moment, I would very surprised to see the rally continue for much longer. More likely, I think, is that sooner or later come back to the March lows to go, maybe even beyond. "
These findings which then turned out to be correct (did the stock head back exactly a week later) and I can confirm, more or less unchanged (the only difference I would say is that the rally from the lows of July was less lively than the minimum in March) again today.
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