Top Line: The stock market continues to flag in here and we still think there should be another good sized rally before this upward correction is over. Of course, we do see the same weakness as you do so we are keeping an eye on the exits--even though we're not needing to sell holdings, just would like to get short if the opportunity presented itself. We don't think that time is now...
We have only a few items to share this evening. The first is that we wanted to remind you that we have a great tool for gauging the speculating community and that is our own FSI tracked at the bottom of every post going back several months. This index inspired by Jim Cramer the crazy guy on financial television who said the Four Horsemen were there for us. So, we have been tracking the four stocks in our index, the FSI.
Anyway, the importance of this index is its ability to tell us in technical terms whether the market is in danger of going down again. We try to teach that the strength of any move can be measured by how it looks compared to the last similar move. So, in the current case, the index has dropped all the way down to 78.48 (yes, sarcasm is traditional around here, you know that by now don't you?) from its recent high of a couple trading days ago at 80.36.
You can check for yourself, but the mid-March lows just under 70 (67.04 on March 10th to be exact) are quite a ways from here. If we approach those lows any time, we will be more interested in talking about more downside. In the meantime, with FSI holding up pretty well here, we don't think there is much concern for meaningful downside.
That is not to say there isn't ample room for the market to drop, it's just that the FSI, which is our Fo(u)r Speculation Index, has not given us much evidence. Other indicators should and are being consulted to make sure that we aren't putting all of our eggs in the FSI basket. We just want to let you know that you have a friend in the game and it's our FSI.
We have a couple of articles of interest this evening. The first come from one of our readers and is a light hearted look at whether the recent run up is a meaningful one or just a trading low. This comes from Market Watch with a little help from Minyanville.com, check them out sometime. There is some funny stuff here.
The other article is a little more serious and has to do with the current economic conditions many are facing right now...and, we might add, into the future.
BTW, thanks for the comment Erick. The former Fed Chairman is astounding, and you are correct, that is not a good word in this context.
FSI: 78.48 (as we mentioned, not much to worry about)