MacroView of Market Strength

10 Oct 09 - MacroView of Market Strength

As we head into the last quarter of 2009, one outstandingly clear pattern is seen across almost all major ETFs representing all industry sectors including financials, transportation, mining, O&G, consumer, industrial, basic materials, biotech/pharma and with the exception of alternate energy and technology sectors... and that is, none of their rallies since Mar09 was accompanied by significant increase in trade volume....

In fact, these last 7 months of increasing prices have been at constant reduction in volume. This is a point that has been highlighted on several occasions and it is my opinion that we must constantly remind ourselves that without the necessary high octane purchasing by institutional investors, almost all rallies will eventually lose steam and crumble under its own weight.

Of cos, if we have stayed inflexible and maintain this age old system of not trading/investing under such circumstance, many would have failed to capture substantial profits in the last 7 months.

We simply have to be acutely aware that when and should indexes start relinquishing its strength, it can do so very swiftly. It is thus critical that we adhere to methodical money management as we continue to tread in thin ice environment.

As with my earlier suggestions, I have no other reason to see an immediate turn of events given present technicals. However, from henceforth, I am increasingly vigilant of turning points.