Online Stock Trading | Stocks Fizzle as Volume Dries Up

Stocks Fizzle as Volume Dries Up


Filed Under Market Commentary |

Price action continues to be very poor on Wall Street.  Its not surprising action continues to be poor given some market internals.  I have spotted these out over the past few posts and they have no improved.  New Highs are enemic and the VIX/VXN continue to show a lack of fear.   Any rally attempt that does not have a favorable NH/NL ratio will not be a powerful rally.  In addition, without the VIX/VXN indexes showing any sign of fear it is highly unlikely a new bull market will emerge.

It took the market nearly 13 years after the 1929 stock market crash to form a tremendous bull market run.  Although we are dealing with high oil prices like the 70s this market action is more tied to the 30s and early 40s.  History is an amazing thing to study because patterns tend to mimic themselves and we are closely aligned with that time period.  Are we going to wait another 3 years for a bull market?  It is quite possible it will be that long before we begin to see stocks that move 1,000% or more.

The most difficult pill to swallow for most is to completely sit out this market.  Human nature is to crave action and shy away from inaction.  However, its the inaction, patience one exudes will make him/her more prepared for the next bull market.  At this time, it is wise to keep a large cash position, very large to insure we have enough capital to deploy for the next bull run.  For those predicting that its in 2009 I point to an old Chinese proverb “Those who predict do not have knowledge, those who have knowledge do not predict.”  History tells us we’ll see another bull market run, that is knowledge but I have no idea when.  There will be signs of a new bull market run, it will be then we can start to deploy our cash reserves.

Enjoy

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