Seeking Alpha

The Dow is just a few ticks away from the 14,000 marker, but it may not make it there, says...

The Dow is just a few ticks away from the 14,000 marker, but it may not make it there, says CNBC's John Melloy. Why? Take a look at small-cap stocks, he says. Stocks with smaller market values – as represented by the Russell 2000 (IWM) – got pounded. As smaller companies are considered to be riskier than their large-cap counterparts, they're considered to be a leading indicator of the "animal spirits" that lead a rally, Melloy says.
Comments (12)
  • Classic

     

    P
    30 Jan 2013, 09:00 PM Reply Like
  • When did a 1.2% drop from the previous close become "got pounded"?
    C'mon man!
    30 Jan 2013, 09:29 PM Reply Like
  • Yeah, let's take a look at the Russell 2000 for a year: http://yhoo.it/14sCAV8;range=1y;compare=;ind...

     

    And, here's the last month: http://yhoo.it/14sCAV8;range=1m;compare=;ind...

     

    The charts hardly show significant evidence of the beginning of a correction, much less approaching any critical support points. This prescience is drawn from a single down day?
    30 Jan 2013, 09:30 PM Reply Like
  • Or we could just call it a healthy pullback.
    30 Jan 2013, 09:48 PM Reply Like
  • On Jan 28 the Russell 2000 reached an all-time high. How is that "getting pounded"?
    30 Jan 2013, 09:55 PM Reply Like
  • Don't worry Ben has got our back. RUT will move to $150 by Summer.
    30 Jan 2013, 09:59 PM Reply Like
  • All the bears are dead at all-time highs, right?

     

    All time highs - sell signal?

     

    Well, believe it or not, most significant pullbacks begin from the point of all-time highs. The past three times that the Dow Tranports reached all-time highs, in 1999, 2007, and 2008, the S&P 500 began significant and lengthy retreats from their corresponding levels.

     

    The Dow Industrials closed at an all-time high on October 9, 2007, a perfect time to sell, given the 20% loss by July 2, 2008.

     

    The last 'perfect time to buy' in March of 2009 were, on the S&P600 and the Dow Industrials, near or at 12-year lows, and almost 54% below the 2007 all-time high.

     

    Remember 'buy low, sell high'?
    30 Jan 2013, 11:28 PM Reply Like
  • sure except you need to know where you are
    this is 1994 not 2000
    P
    30 Jan 2013, 11:59 PM Reply Like
  • How do you support that opinion?

     

    Or, better yet, just respond as soon as gold and oil continue their decline, as they were in 1994.
    31 Jan 2013, 08:49 AM Reply Like
  • Tiger:

     

    Try this: http://bit.ly/VxsCkX
    31 Jan 2013, 08:52 AM Reply Like
  • I'm a great fan of Bob Bronson. So much so, that with his permission,
    he is quoted in my new book.

     

    However, here's a very recent one that went a little different from plan, suggesting, 3 years ago, an imminent peak and a decline into '12 & '13. We're still waiting.

     

    http://bit.ly/XV1GXu

     

    So, in spite of his extensive analysis and conclusions......this week, his conclusions, which I do not have permission to repeat here, are shall I say, much less than bullish over all time ranges beyond the very short term.

     

    Your chart reference is from 2009, projecting a bullish environment within 5 years at that point.

     

    It's obvious, in retrospect, that not only are the chart projections conclusions flawed, but, even a year later, my 2010 reference, there was still a need to compensate for multiple rounds of QE.
    31 Jan 2013, 09:17 AM Reply Like
  • You can't convince a bull markets are overbought. But with a shrinking GDP, fiscal issues down the road, negative European fundamentals in place and a Chinese landing ahead, you might want to be cautious. Greed sentiments that drive the current rally often expire suddenly, there's no early warning system. Russell's pullback, but also transport stocks selloffs and metal price increase show that the bull party is over, its time to dance with the bear.
    31 Jan 2013, 02:37 AM Reply Like
DJIA (DIA) S&P 500 (SPY)