70 products opened green today with the market down almost 1%.
Somebody’s going to look at that advance-decline line and call it a good sign. It isn’t.
Go look at what’s green.
A few of those names matter. Most of them are crap. What you’re watching is a marketplace buying garbage to prop itself up, and that is nothing like a market anybody wants to own.
Meanwhile the semiconductors got taken apart at the open, with memory down 6 or 7% and Intel getting hit. And Google opened up $5, Meta had a $10 bid under it, and that rotation is the only reason the Nasdaq wasn’t down 1,000 points.
Which is money hiding, and it is a different animal from strength.
Jeff Bierman has a phrase for it that I’m going to steal, which is that this reeks of desperation. Money management and desperation, and the underpinnings of this market are a sick little animal.
And I don’t like rotations like this. Not a little bit. Not even the slightest bit of me likes them.
A rotation has one requirement. It has to keep finding somewhere to go.
We’ve been rotating all year. Trapped in the same finite range since May of this year, and here we are in September sitting deep inside it. Every time one group gets sold another one catches a bid, and the index holds together.
Right up until it doesn’t, because eventually you run out of places to hide.
So when you see a positive advance-decline line on a down day, don’t read it as the market being fine. Go look at what’s being bought instead.
And when it’s time to decide what to trade, I run a list of questions. It takes about a minute to do and it sets you up for a strong likelihood of success.
To your success,
Don Kaufman
