Any new advance in the market requires frssh, new buyers, with increasing volume. At these high levels, nobody is buying into this market these days ! Read on !
Written: Monday, Sept 7, 2009 (9am EDT)
VOLUME : In a healthy, robust market, each new advance should bring in new buyers, who are willing to push prices up even further.
These “new” buyers are being slowly convinced that the future will be brighter than today – and are willing to invest, thinking that, in the days ahead, even MORE buyers will join them and enter the market – and push prices even further upward.
BUT, we are NOT in a healthy, robust market. The recent rally hasn’t brought in the corportate Insider, or the daring mutual fund, or the experienced Donald Trump’s of the world, or the reputable bankers.
All of these “sophisticates” are still sitting on the sidelines – with all their money – ready to invest, but they are not investing.
Why?
They need to see some potential increase in the Earnings and Growth Factors before they expose their investments to any future risk. And, they need to see those Earnings and Growth figures increase – across the board – in the majority of stocks, not just in one or two select recession-proof stocks. \
At this level, the market is just too high to risk any capital – mainly, because none of the financial formulas that these guys and gals use for investing, see the market moving upward another 30% or 40% – and that’s what you need for the amount of risk involved today.
A sell-off would be just great, to change a lot of opinions, and make the risk worthwhile.
In the meantime, VOLUME is growing less and less with each new advance. That means fewer and fewer buyers. That means the upward cycle is about over. The exact number on the Dow isn’t important, since we’re talking about smaller and smaller volumes for each of the ”average price” of 30 stocks.
Less Volume means Fewer Buyers !
What is important is that the upward momentum is dependent upon more and more buyers entering the market – and, at this juncture, that AIN’T gonna’ happen!
Without support coming from new fresh buyers, this market is doomed. If I’m not going to buy until prices get much lower, why would anybody else?
If you enjoy chasing high-flying risks, be my guest ! But, when you look down, you may be without a cusion or a parachute.
Stay Tuned !
Jack
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