August 23, 2011 (Up, Up and Away?)

Have we reached bottom and are now starting up? Or was today just another head fake? Most likely we are starting up, but I wouldn't be surprised if this rally fails. But even if it does fail, we are near the bottom.

KJ came through and stayed on the down side big time today. Basically the same numbers as yesterday in the S&P 500. So he lost over 15% a week or two ago when we had those large up days and he was on the down side. Now today he lost over 6%. Don't you feel sorry for him? No! What is he going to do now, do you think? Those three large up days followed by the move back down recently certain was a training exercise. Will he stay in no matter what for a few days, figuring it's going to turn back down, since all the conservative radio talk show hosts are saying we're doomed and we should all buy gold? Or will he just say screw this and get out? Or would he actually figure there will be another large up day or two and get on the up side? I doubt that, but you never know.

The numbers were not good to see in the Nasdaq 100 though. There was a very large move to the positive side. The numbers in the Nasdaq 100 for the last four days, giving just the result of dividing the larger number, which is the positive number, by the smaller number, the negative number:

Thursday, August 18: 1.57

Friday, August 19: 1.39

Monday, August 22: 1.45

Today, Tuesday, August 23: 2.53

Wow. That's quite a jump to the positive side, all the way up to near what was then the record highest number I had seen when we had the top in 2007. So that worries me. But that could fall back down quickly. I wouldn't be surprised if many of them on the positive side were just looking for a bounce and will quickly take profits and get back out of that positive position. I hope. The usual pattern for the start of a big move up is two or three large up days, followed by a down day as people jump in on the positive side, which scares them off, and then we continue moving up. Since today was such a large up day, we could get that down day quickly, like tomorrow. That would probably scare off a lot of the positive money in the Nasdaq 100.

What will KJ do going into Wednesday? Will he stay on the negative side, or get out? Will the money on the positive side in the Nasdaq 100 take profits or get even more positive? Wednesday should be interesting.

Rob