Prieur:

I, by no means am a Financial Wizard, Economist, Money manager (Except my own)or Fund Manager...But I will give my perspective...
If it's a rally, it's a short lived one. I firmly believe there is a lot of manipulation on-going behind the scenes...Just about 99% of the news is all negative, Firms filing Bankruptcy, Guidance dropping, The Credit debacle seems to be growing in areas, other than mortgages, Governments worldwide are flying by the seat of their pants trying to prop up their national economies, the Value of Gold is dropping like a stone off a sheer cliff, yet people are having to wait 7-12 weeks to take physical possession of what they purchase, when it used to be 7-12 days, etc etc...
There are a number of Specific indicators I use to gauge the overall "Health " of the markets. 1st is the trend. a One day spike like what happened yesterday needs some additional confirmation on my part before I feel it is beginning to turn. I Like Wm. Oneils' (Investors Business Daily), idea of a FTD (Follow-Through-Day)to provide confirmation. Moves like yesterday are common place in bear markets from what I'm told,and we can expect them as normal. Another indicator is the number of New High vs. New Lows. a Normal, Healthy, Non scientific quick gauge is that if you're averaging around 500 New Highs a week from the NYSE, NASDAQ & AMEX combined, the Markets are generally in a "Healthy" attitude. I keep daily stats for my own personal watch and I obtain the numbers from Barchart.com and the WSJ Daily. So far for the 4 days this week, the "Average" of New Highs has been 11 vs. the 4 day average of 827 New Lows... It's been following that "averaging trend" for a while now...Another one I use in combination is the percentage of stocks above their daily moving average, which I also gather daily from Barchart.com. So far this week, the stats tell me that the average percentage of stocks above their 20 DMA is 31.58%, 50 DMA is 10.57%, 100 DMA is 6.79%, 150 DMA is 6.05% and the average number of stocks above their 200 DMA is 6.03%. A healthy scenario would be that the 50 and 100 DMA stocks are above a ball park figure of 60%. One more aspect I use is the "Ted" spread, the 30 day Libor rate vs. the 30 Yr rate. from what I've been told, a healthy market condition is when the "Ted" spread is averaging around 0.35% to 0.40%. So far this week, it's averaging around 1.98% this week according to my calculations... The Trend of the Charts give me some indication, along with all these other factors included. If the Charts begin to display the markets are giving a FTD, and the trend of these indicators start to progress along with behavior of the market, then for me, thats an indication the overall market is starting to rally...But as of right now, this market is in a very, very sick patient and needs to be placed in critical care...Just my two cents..

rds1955
"I have no Idea what I'm talking about"