Yet. Of course, it can, but it has yet to show any sign of doing, so no matter what's going on around it that says it has to sell. At least some one would think that’s the case. We can research one weekly index chart after another, and the degree of negative divergences is huge. Sometimes you look and think, well these aren't that bad. Not the case here. They're really bad. Then we can take a look at the monthly index charts. We get concerned when RSI's approach 70. Well, now they're approaching 80 in some cases. Unheard of on monthly charts. Nice combination for the bears between the weekly divergences and the monthly overbought conditions.
One would think, but nothing yet for the bears. So now we can focus on the daily charts, but they too are approaching, or at, 70 RSI's across the key-index charts. Could the bears ask for more? Now that you ask, yes they can. They can say, “hey bulls, you're out of control on the sentiment front,” and they'd be correct in saying so. Another journey to the land of over 40 on the bull-bear spread. Add this all up, and, to be kind, the market should be falling apart. Just getting annihilated day after day. No mercy. Straight down with huge volume to top things off. The bulls should be taking a real beating. Nope. No sellers. Not even a hint of it. Seems impossible, but it is what it is.
I admit I don't understand it. Since this, basically, never happens there is no way to know if, or when, things will turn down. The fact that I can say “if” tells you the power behind the market in terms of not allowing a single, reasonable selling episode. It may not be healthy, but that's what we're dealing with for now. Neither I, nor any one of you, know when this will turn, so you stay with the trend in place and wait for the reversal. As we have discussed, if you're in you'll have to deal with some losing trades at the end of things, and, thus, your choices are playing lightly or staying cash. Shorting makes little to no sense. The unheard of is being heard loud and clear for now. Interesting times.
It has gotten so bad for the bears that they can't even take out the simplest of support levels on the short-term sixty-minute charts. 204.00 on the S&P 500 is the 20-day exponential moving average, and watching for two hours as the bears tried to take this level out with force, was almost comical. It has gotten so bad that it’s almost as if the bulls are rubbing it in to the bears. “Go ahead and try boys and girls. It's only the 20-day EMA on the short term charts. Anyone can do that, right?” Well maybe you can't. Mocking them. Every attempt below met with instant buyers. It's sad to watch.
The biggest problem with all of this is the bulls are allowing their own frothy behavior to increase the level of bulls to bears. The higher the spread the nastier the damage somewhere down the road. The mocking they're doing now will come back in spades against them in time. But, for now, the very simplest of support levels can't be taken out by the bears. Saddest times for them I can remember in quite a few years. It's as if they've truly given up on all levels. A bad sign for the bulls? We shall see, but, for now, the bears having absolutely nothing, even when they are up against the easiest of support levels.
Do not lose touch with what's happening in this phase of the bull market. In normalized bull markets there are few, if any real, slaughters that take place from sector-to-sector when they get overbought. They gently pull back on price as the oscillators unwind themselves. Not the case here. Since this is a bullied bull market due to rates, the money is rotating, but as it does we are seeing some real nasty days along the way. Today the biotech stocks took a beating. Some true collapses not only today, but for quite a few days. Some stocks just crushed along the way. The point is that you can't just throw a dart and know things are good.
You need to do some real research on each sector chart before running in as an overbought sector, because it can lead to real nastiness. Stocks such as Biogen Idec Inc. (BIIB), Puma Biotechnology, Inc. (PBYI), Regeneron Pharmaceuticals, Inc. (REGN), Amgen Inc. (AMGN), Gilead Sciences Inc. (GILD), and Celgene Corporation (CELG) to name a few today that took hits. Some massive. This market is more complicated in terms of where you place your dollars, so be very careful to do your homework before entering. Be sure not to play sectors with 70 RSI's. They can work, but the risk is very high. Look for unwound situations on those short-term sixty-minute charts for safer entry. Nothing is guaranteed, of course, but the more unwinding you get the lower the risk.