2007 Sector View: The Good, The Bad & The Ugly

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Then there’s the “good, the bad and the ugly”.

Dave’s Daily reader and now subscriber Dave Hurwitz always has an interesting observation to outline and below is another contribution.

The Hurwitz View

TRIN Rally History in 2007

The phenomenon of a market rally after a session in which TRIN is equal or greater than 200 (High TRIN) is well known. Usually, when an association between market factors becomes well known, it ceases to work. That’s not the case in 2007 when there have been ten instances of a high TRIN result that have each triggered a rally for the DJIA and S & P 500 as shown below:

Most often these rallies have been two or more session affairs. Although there was only a minor gain in the DJIA and S & P 500 on 12/28, that might reflect the impact of year-end cross currents including tax loss selling. So, it will be interesting to observe whether the phenomenon works after the next occurrence of a high TRIN result.

TRIN = Advancing Issues/Declining Issues

Advancing Issue Volume/Declining Issue Volume

That brings 2007 to a close. What lies ahead is difficult to know. As a trend-follower we can only argue that trends will continue until they stop. That sounds like a pathetic and obtuse statement but that’s the way it has to be for folks like us.

Have a safe and Happy New Year!

Disclaimer: Among other issues the ETF Digest maintains positions in: GLD, DBC and IYR.