Sunday, September 12, 2010

We are still resting

Now a week has passed, the market is still rest just under the resistance. Can we break out? I still don't know. But here are some positives and negatives for you to think over, you may be a better judge.
First the positives, as usual.
1. More stocks came around and formed a breakout pattern, either cup and handle or bull flag.
2. The already broke out stocks have kept the gain very well, namely as AKAM, FFIV, CMG, VMW, NFLX etc.
3. The recent economic numbers are much better than expectations.
4. China's stock market bounced back after a brief decline.

The negatives:
1. The sentiment has flipped to bullish too fast. The AAII bullish number has grown to 44%.
2. High CPCI number indicates big boys are betting upside is limited. I borrowed the chart from Cobra and attached down below.

Now the neutral factors:
1. The bank sector has been lagging, but now came around a bit. The semiconductor sector has just disappeared entirely in this recently, but the good news is Taiwan is about to break up, which is the manufacturing base of most of semiconductor companies.

My best guess is maybe we rally a little further, but upside is limited since the sentiment and the lack of leadership from the bank and the technology. What do you think?

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