I am going to give you a look inside Exodus to show you what I look at, when trying to evaluate the market.
The Indices are higher; but that’s only part of the story. We want to look behind the curtain to see how the key actors are performing. For the day, with exception of a few, like FCX (which is news related), they are doing great.
Market breadth is most important to me, which is now in the mid 80% range.
We can break it down further and see where the weakness lies and if those industries are vital to today’s rally.
Aluminum is the only industry lower today, out of 200 plus in Exodus. Do you believe it can derail today’s rally? Is AA that important?
One little industry is lower. Who gives a shit?
As a whole, today’s rally is broad based, robust, and ripe to pressure short sellers to buy back shares.
Here is my short squeeze screen, featured in what we call “the grid”– up more than 3.3% for the day, on a median basis.
It runs 8 pages deep, which tells me shorts are covering.
Lastly, I look at risk. I do this by monitoring my ‘Bubble Basket’, which is an index of stocks that I built, filled with high valuation momo stocks, that is the perfect barometer for risk appetite.
It is up nearly 2%, with only a few laggards.
Only disaster can derail today’s rally. I think we close at the highs.
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The nature of this draw down made it very easy to pile up shorts on bounces, and the news has been so horrible that you know they will cling until they are deep underwater. Comparing today to 2008… lots of people were seriously doing that. That alone makes me think we can get back to all time highs, but I’m not banking on it.
Declining moving averages will hold
and contain any rally
Lower highs now rule you & the roost
You have been right so far but don’t forget to cover
as 401k season is on us.
One negative is volume. As of right now it’s relatively low. Not sure if we have conviction buying yet.