Well, the market did manage to shrug off Katrina after a mildly negative opening. The market found some support this morning and Monday became an up day just because.
Not much other news today except that the Dow did not manage to climb the required 70 points and the 200 day SMA has now managed to turn over. This is not a strong endorsement for a good down move but it does give added bearishness, at least on the surface. That 10,500 number is again pretty close and, with the momentum generated today, we could easily see it again tomorrow.
The two SMA's that we follow on the Dow are now both pointing down and the 50 day has pierced the 200 day to the downside. Normally, this is significantly bearish especially with the Dow itself below both of those lines but in this case, with the Dow still hanging around 10,500, we need to be patient and watch carefully for other signs of market weakness.
The volume today was fairly light and the summer volume doldrums seem to be the normal course for the market here in late August. Over the next week, the bulls are looking to grab some power to the upside and with today's reversal, even on low volume, they could get some follow through on today's mini-reversal. They do need to get some volume going next week in order to see any significant push to the upside. We are not so sure. Last year volume was light in August and September with better volume showing up in October when the Dow made its last solid low near 9750.
Dow Industrials: 10,463.05 +65.76
BGEIX: 11.36
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Good article on marketwatch.com about insider selling in the home building industry. Here are the highlights.
BOSTON (MarketWatch) -- A rash of insider selling in recent months at red-hot homebuilders appears reminiscent of a similar trend right before the technology bubble burst in 2000, Merrill Lynch said Monday.
"There has been record insider selling within the last 10 months across a broad range of homebuilding companies despite very few sell ratings by Wall Street analysts and the general perception by investors that the stocks are undervalued," Richard Bernstein, the firm's top strategist, wrote in a note to clients.
Based on data going back to 1985, Merrill found that insider net selling at eight major homebuilders -- including bellwethers such as such as KB Home (KBH: news, chart, profile) , Ryland Group Inc. (RYL: news, chart, profile) and Toll Brothers Inc. (TOL: news, chart, profile) -- has hit record levels at some point in the last 10 months.
"Such insider behavior seems to mimic that of the technology sector around the peak of the technology bubble in March 2000," Bernstein said.
Makes you feel good about your shorts and cash.
Erick
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