The current correction has been
somewhat deceptive due in part to the relative strength shown by the
SPX. The close of this week shows the SPX down 3.29 from the 9/14
high and the Russell and NASDAQ are down 5.01 and 5.32 respectively.
Usually I use the $BPNYA but this weekend I decided to do a
comparison of indexes based upon their specific $BP signals and do a
comparison to the corresponding index and it's price relationship the
last time it was at these levels. What stood out was the NASDAQ with
only 54% of stocks showing a buy signal compared to the NYSE at 66 and SPX at 69.
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| $BPSPX |
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| $BPNYA |
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| $BPCOMPQ |
Many consider the NASDAQ to be the
leading indicator and outside of the obvious that it has pulled back
further, the 14% disparity in stocks showing a buy signal is more
glaring. Going into this week I'm leaning bearish and focused upon
SPX related ETFs to short the general market. The main reason I'm
looking at the SPX is that should heavy selling begin to hit the
market and given the relative strength thus far, this looks like the
better risk/reward play.
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