More on market rally ending

It’s becoming a regular in major newspapers.  Everyone’s just talking about how the markets have gone up so much so fast and a (steep) correction’s just lurking around.  A piece from the NYT names people who were once bullish but are now threatened by the market actions.  Well why not, you have light trading volume the past couple of weeks and last week the WSJ ran a story, which indicated 5 stocks that were responsible for more than 30% of the trading volume at the Big Board at some point last week.  To prove my point (from the WSJ):

On Monday, 34% of all trading volume on the New York Stock Exchange was concentrated in three stocks: Citigroup, Fannie Mae and Freddie Mac, according to Thomson, and Citigroup alone accounted for 17.8% of all volume. On Tuesday, five stocks: Citi, Bank of America, AIG, Fannie and Freddie accounted for 36% of all volume, according to calculations by The Wall Street Journal’s Market Data Group.

Anyway, here’s what NYT is saying today:

Some of the analysts and investors who called a bottom in March, when the markets hit their worst levels in more than a decade, now say they are detecting a peak in share prices, and they warn that stocks could be headed for a sharp pullback.

On Friday, the research firm TrimTabs reported that insider selling had grown to $6.1 billion in the month of August through last Thursday, its highest levels since May 2008 — when the Dow Jones industrial average was floating above 12,000, compared with just over 9,500 at Friday’s close.

The ratio of insider selling to insider buying also soared in August, to about 30 to one, its highest levels since the firm started keeping numbers in 2004.

Read the story from the NYT.

I wonder if this Friday’s unemployment data would serve as a good exit point, although experts are expecting a lower decline in the data – 225,000 vs. 247,000 in July.

Just a quick thought, and a little off topic: declines in the US markets don’t seem to take heed of the very volatile situation in China, whose Shanghai Composite Index has seen declines of more than 5% a few times last week (followed by not-as-strong jump up). Today it dropped it’s biggest for the year of 6.7%. Now, the Index is down more than 20% from its crisis-peak.  The market close for today marks two significant events: this is the first month for the year that China has closed on the red and SCI is back to the bear market stage.  Has China gone ahead of the market correction expected of others who have similarly picked up quick from the lows of the year? When is the US correction really happening? (Will people be caught off guard again?)


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