WATCH: The 4 Stage Stock Market Cycle


Bye, Bye Wall Street? Will the short-sellers save the day?

By Chris Rowe June 6, 2007 Facebook Logo Twitter Logo Email Logo LinkedIn Logo

The Wall Street sector (I'm talking about the stocks within the sector), which has basically been a leader of this market's long bull run, has just turned to the downside. 

This is another bearish sign for the market as a whole.  I can't get too deeply into which specific Wall Street stocks look the worst, as it would be unfair to members of TTR, but I did want to let you know what's going on because it speaks to the internal strength of the market.  Specifically, the Sector's Bullish Percent Index shows that the sector moved from being over 70% to under 70% reversing its "bull confirmed status" to a "bear confirmed status."

The Bullish Percent Index gives us a clear picture of the breadth of the sector.  So if 80% of all stocks are on buy signals, the BPI will read at 80.  If 40% are on buy signals, then the reading will be 40 and so on.  As of yesterday (Wednesday) morning, the reading was at 64%, down from the recent high of 70%.  When this sector in particular moves to a bear confirmed signal, it usually is followed by a very fast sell-off for the sector, which would lead the market lower.  Again, this is what usually happens, but it's always important to use several technical indicators in conjunction with one another and not to rely on any single indicator. 

In last week's article titled "NYSE Bears at 76-year High!", I gave you a little bit of insight to the market internals, sentiment and momentum, so I figured that I should alert you to this new development in the Wall Street Sector.  As I mentioned above, when the sector goes on bear confirmed status, it usually drops very fast from head to toes.  But given the high levels of short interest on the NYSE, the market should be pretty volatile on both the upside and the downside for the next month. 

There's no way that they'll pull me back in!  (Not any time soon, anyway)

Speaking of the Wall Street sector...   

I've been contacted by various companies, lately, that want me to manage assets for their clients.  These are people who happen to read The Tycoon Report on a regular basis.  I've been having so much fun with Tycoon lately, and I think about that all the time, but I guess that listening to these tempting offers really put me to the test.

I mean, after explaining that these offers sound great, and that I appreciate them, I felt compelled to explain all of the reasons that I'm happy where I am right now. The fact that I was forced to explain this in detail (since I respected the people who contacted me) just reinforced my decision, and made me really consider everything that's happening here.

I get to speak with, and help, over 100,000 people who we send these articles to each Thursday when I write.  I get to communicate all of the time with members of The Trend Rider, and I get to read all of your feedback when you click on the link at the bottom.  I don't know that I've ever had more fun in my financial career!  (I even get to brag about getting married and having a baby girl and all of that mushy stuff.)

The feedback that I get from you is awesome, and even the negative feedback is hilarious, so keep them both coming, please.

Of course, the money to be made by managing a fund is greater than what I make with Tycoon, but I swear that at this point in my life, I'm more interested in the positive energy that I get from helping people in this report.  So thanks again for all of the feedback.  The more you learn about trading and investing, the more money you'll make (and the less you'll lose!)