Saturday, July 05, 2008

Fear, No Panic, at the Market Disco

The Dow has been moving to bear market lows and the number of NYSE common stocks making fresh 52-week lows has taken out its March peak, but so far investors seem to be seeing this as more credit-related sin than tragedy. I've mentioned in the past that there have been spikes in traffic on this blog at recent intermediate-term lows (August, November, January, March). No such spike has yet occurred during the market drop.

OK, maybe it's just summer doldrums in blog traffic. Maybe my readership has deserted me at the altar of the blogosphere. Still, let's face the data with a sense of poise and rationality. As the chart above notes, the American Association of Individual Investors poll has also shown spikes at those prior market bottoms. We're now seeing an elevation of bears in the poll above the 50% level, but the bearishness is more muted than in January or March.

We're also not seeing the January or March levels of bearishness in the equity put/call ratio, and surely no panic has hit the disco in the VIX, which remains below the 30+ level seen at those prior market lows.

Perhaps we'll yet successfully test the March lows in the S&P 500 Index and, technically we can be saved and pour the champagne. For now, however, I note the continued decline in the advance-decline line of NYSE common stocks to new bear lows and the continued decline in the cumulative NYSE TICK and I'll stick with poise and rationality: my door remains closed.