Blissbull ......................
I am a firm believer in channels, tl's, basic technical indicators, my favs being adx, rsi, macd. I'm not big on EW's although I follow the consensus on them and take them into consideration (the calls recently of a nest of lows were dead wrong), not big on Hurst cycles or Bradley planetary prognostication, lol. More than anything, I watch world events, economy, and market fundamentals, and as a trader, short term indicators.
Fundamentally, the s and p is still 7 pts. over it's traditional p/e. I would agree that this is a different economy than 20 years ago, and specific sectors realize the type of growth unheard of in the 50's through 70's. However, there are still ridiculous p/e's out there in tech land. Look at OSTK market cap vs. earnings, Yhoo, most of the semi's, INTC being the only one with a fair p/e and peg.
In the short term, I think a rally will occur. However, it will just be a relief rally in the bigger down move we're currently in. Much of the earnings growth of the last year was due to cost reductions by corps, and alhtough top line growth has been impressive in certain sectors, we are also realizing the effect on the economy of the many layoffs that occured. I met a trader on IHUB who is basically daytrading for a living because he was laid off from LRCX and there's simply no new jobs in his area of semi's. Combined with higher energy prices, probably unfounded but there none the less, rising interest rates, and political uncertainty, I think this points to a medium term decline in equities. There will be rallies, I expect a nice one in Sept. But I think by spring we'll be back to the 1100 area NDX before the bull resumes in earnest.
JMO, and since I prefer trading from the long side, I hope I'm wrong! Best of luck in your trades! Looking to go long QQQ calls in the am w/ a tight mental stop if 32.50 breaks for a rebuy around 32.00. If 32.00 breaks in the coming days, QQQ's will see 30.00.
BTW, re book to bill, that will be a key number to the SOX since the decline in the last report (1.08). I am also watching inventory levels in upcoming SOX earnings, as KLAC and INTC were higher.
Basically entering each day w/ a neutral bias and trading the trend.
Buzz
