My crystal ball worked pretty well with regards to what would happen once the NASDAQ hit 2,000. It reached that level mid-day, closing a gap from way back in January 15th of 2002 by 0.01 points (damn those technical traders!). It was a very weak attempt to break out above 2,000 and the buyers quickly disappeared, letting the NASDAQ drop 2% from the high of the day. Besides the fact that the S&P 500 is still sitting above its November highs I don’t see much to get excited about on the long side. Here are some bearish developments I’ve been noting:


  • An outside reversal day on higher volume on the major indices today.

  • My stochastic indicator (5,3,3) showing a sell signal on the major indices.

  • Bearish OBV divergences on the indices (vs. the OBV levels at the November highs).

  • A significant number of stocks that are struggling at their 50-day moving averages.

  • A lot of bearish candlesticks the last 2 days — shooting stars today, bearish harami yesterday.

  • A high percentage of stocks at or above their upper Bollinger Bands.

  • Complacency — people seem to think that we’re owed a ‘Santa Claus’ rally.

Having said all of that, the market still looks good longer term, but I think there may be a little bit of short term pain for the bulls.