From Richard Russell:
There are nine items that I don’t like about this market (a repeat with the two new numbers 8 and 9).
(1) Far too many distribution days.
(2) The bullish percentage of stocks on the NYSE is declining.
(3) The percentage of stocks trading above their 50-day MA is declining.
(4) The Transportation Average continues to decline (even on days when the Dow is up).
(5) The Transport Average broke below a preceding decline low October 28.
(6) Sentiment is too bullish regarding the market. Nobody expects this rally to top out and fall apart. Analysts consider it impossible that the March lows will be revisited again. I don’t share their opinion.
(7) My PTI is now only 8 points above its MA and therefore very close to a sell signal.
(8) The Dow, so far, has not been able to close above the 50% level of the 2007-to-2009 decline. The 50% level was 10725.
(9) Overall volume tends to expand when the market is lower and contract when the market is higher.
Source: Dow Theory Letters
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.