Sand Spring Advisors LLC
Upsetting Week, But...
June 6, 2003
by, Barclay T. Leib
When we penned our June 3rd note, "Twist and Turn Finished," we did not expect to be writing a note of apology at the end of the week. But the past few days were simply not what we had visualized transpiring given the "shooting star" reversal formation of the S&P on Monday. We appear for the moment as cold as ice -- our technical muses seemingly on vacation -- but in no way have changed our overall bearishness.
It is also important to point out that short-term "throwover" moves beyond our espoused Fibonacci targets are not exactly new.
Not that long ago, back on October 4, 2002, we were bullish the S&P at 804. But in a two-day move, the cash S&P Index went ahead and made one last thowover move to 768 (seemingly just to scare the hell out of us), before turning signicantly higher. Perhaps now it is doing something similar to us with recent excessive strength. Perhaps Mr. Fibonacci is simply too rational and sane for today's "dump them at any price" and "buy-em back now" average American investor.
As another "throwover" example, it is also a fact that back in late 1999, when we forecast a significant high on the DJIA high near 11,542 in our article "A Thirteenth Century Mathematician & The Current Rhythm of the DJIA," the market eventually went though our target by approximately 1%. But it did so for only about a week, before slamming lower -- never to retest that spike high again. Perhaps Fib bands are not perfect, but instead just "natural attractors" that can be exceeded during periods of virulent one-way sentiment.
Of course at this point, it is clear that our June 1-June 3 cycle window of potential stress came and went without apparent incident. Only Martha Stewart will remember these days as being particularly nasty. At present, we can only point to June 23rd as the next date of potential importance when the 2003 Bradley Model is due to leave a cycle peak. Thereafter, July 27-29 should still be a low -- but maybe not as stressful a low as we previously expected.
From our friend Dimitri today we offer:
Using all ADRs and U.S. exchanges, stocks under $5 accounted for a full 44.8% of the volume Wednesday (2.57B of the 5.74B total). That suggests that the volume we have been seeing is less significant because the value traded, or the size of $ positions is lower than volume flows would indicate. In other words a 100,000 share position in LU is a pretty small commitment compared to a 100,000 share position in IBM. We’ve been disappointed in volume flows generally as it has not shared the usual surge that accompanies secular market bottoms, but the influence of small stocks makes this deficiency even more curious and suspect.
Best of luck to Funnycide in this weekend's Belmont Stakes. It's about time for an unexpected Triple Crown winner. In our opinion, if a spoiler is in the field, come-from-behind specialist Dynever might be Funycide's greatest threat.
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