I've been toying with the idea of sending these commentaries out on a bi weekly basis but based on the feedback from some of you I've decided to continue sending out weeklies. However, I'll be sending out more condensed commentaries. One of the challenges of a shorter commentary is that some of my readers may not understand some of the more complex concepts that I identify in the reports which I have attempted to explain up to this time. I request that if there is something that is not understood in my writings just email me with your questions. I'll be happy to respond.
Throughout this week I had been concerned with some of the glaring technical divergences that the market has been manifesting. And although we began to see cracks in the market on Thursday and Friday these divergences are still conspicuous. More importantly, to my mind anyway, these divergences aren't the "garden variety" type that signal a normal correction. They look like something much more serious.
Most of you know I'm no fear monger and I'm generally turned off by Armageddon scenarios but some of these divergences are spooking me. Yet, as Fed liquidity "floats all boats" the popular mantra on the street is "buy the dips". We saw another example of this on Friday as the major indexes, though finishing at a loss on the day, came back considerably from their intra day lows.
I'm going to outline the divergences I see in order from the most benign to the most serious.
The Dow Transports had been leading this market higher at a frenzied pace but were brutalized this week:
A look "under the hood" of the market reveals a technical divergence in breadth:
The following divergences are causing me greater concern regarding the intermediate and long term prospects of this market. Notice that these are all weekly charts which lends to their greater significance:
Here's Brent Crude: