Did you happen to notice the NYSE Composite finished slightly negative today while the NASDAQ Composite rose 1.50%? Oddly enough, too, the NYSE advance/decline ratio was 19/11. Now that's curious! Nearly two stocks up for every stock down and the NYSE Composite finishes lower.
As best as I can tell, there were no specific sectors putting a drag on today's NYSE trading. I simply must assume the very gravity of the stock market's still unfolding crisis of confidence was subtly revealed as such. The problem really is apparent, too, seeing how the NYSE struggled to turn around today, and follow the lead of its electronic brethren of pump and dump fame.
This morning's pullback to the boiler room gap open on NASDAQ came as a bit of a surprise. This steeper than expected fall notwithstanding, though, NASDAQ's RSI maintained its upside bias throughout the day as the index proceeded to lead the stock market higher. So, this suggests the market's bounce (projected by yours truly) still has legs.
The question is how much follow-through might we reasonably expect?
NASDAQ 2505-2520 would work for me ... with or without some sort of RSI divergence signaling a completion of the presently unfolding, counter-trend rally ... (more below).
The NYSE Composite topping out in the area of 9400-9450 similarly is a rational objective to an Elliott Wave Guy. Likewise, seeing the NYSE Composite outperform its NASDAQ counterpart from here to the top would be a welcome development, given the outlook for an imminent meltdown.
In keeping with prospective NYSE and NASDAQ bounce targets the S&P 100 should top in the 635-640 range. (The lower the better ... maintaining harmony with the large-cap drain that has thus far dragged the stock market lower since last Monday, 5.19.08.)
Now, if we see a pop tomorrow carrying indexes to their above stated objectives ... with respective RSI readings reaching an eye-opening extreme ... this, indeed, would be about the most beautiful thing we could hope for here. Given anticipation for an accelerating decline culminating in a crash over the days ahead, such a fine display of irrational exuberance would be a most fitting prelude to that end.
One "danger" here is the market turns lower tomorrow and Thursday, only to scream higher on Friday. This scenario would have the market's "bounce" turning into a sideways consolidation, and taking longer to unfold. There's reason to suppose, though, this will not happen, and today's bounce will end sooner (say, tomorrow) rather than later.
On Friday (5.23.08) I said, "The next day or three could raise a sense of urgency about the outlook I presented last week suggesting the stock market is about to embark on an accelerated decline resembling the crash of October 1987." I am feeling this already.
If there's one thing I would prefer seeing by the close of business this Friday (5.30.08), it is the stock market trading lower and still giving every indication it is on the verge of falling apart early next month...
(See why David Einhorn, President of Greenlight Capital, was giving CNBC's Maria Bartoromo fits today about Wall Street investment bank transparency ... fingering Lehman Brothers in particular ... much to Squeaky's "astonishment.")
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