Monday, July 16, 2007

Monday Market Thoughts

* Been Here Before? I had a funny feeling this AM that I'd seen this movie before: the market makes a momentum peak in April, trades in a range for the next several months, then breaks out to new price highs in July on weak TICK and non-confirming advance-decline numbers. The market? 1998. We can see above that the current advance-decline line is still not confirming the market's recent highs, though it's not nearly as weak as 1998's level at the July price peak.

* Other Advance-Decline Lines Non-Confirming - Stats kept by Decision Point find that we have confirmed price highs in the advance-decline line specific to NASDAQ 100 stocks. AD lines that are not confirming price strength are those specific to the S&P 600 small caps, the S&P 400 midcaps, the NASDAQ Composite, the S&P 500 large caps, and the common stocks only for the NYSE Composite. That's a lot of non-confirmations.

* Big Market Lessons - The Big Picture passes along some excellent perspectives from Mark Hulbert. Abnormal Returns also passes along an interesting article from Hulbert re: "neighbor", herding effects in portfolio selection.

* Interesting Reading - Mike again finds worthy links, including an article on trading and blackjack and an interview with Doug Hirschhorn.

* Buybacks Gone Wild - Companies seem to love their own valuations here; the market is awash in buybacks. Here's a skeptical perspective on the buyback binge.

* Losing Relative Strength? - The Shanghai A Index--the poster child for emerging market strength--is well off its highs of the past few months.