The fiduciary hairs on the back of my neck stand on end when I read analysis comparing the January-February pullback with the June-July pullback. No wonder people lose money listening to sound bites.
Last summer, the market made its first significant corrective decline since the Armageddon low of March 2009. Fear was palpable. But volume was light. Hmmm. Light volume on a pullback with an extreme level of fear? Sounds like a buying opportunity and even Mikey the Bear (uh, that would be me) had to jump on the rally bandwagon, albeit after a few days of gains were foregone.
Right now, the shape of the pullback may be the same but it began with an extreme in optimism, and so far has not morphed into fear. It has also come on heavy volume. In fact, days like today when the market rallied came on lighter than average volume.
What else is different? How about a mini-death cross of the 20-day exponential moving average below the 50-day expo? Did not happen last summer.
Or emerging markets underperforming now and not in July?
Or good, and especially bad earnings news resulting in clock cleaning in the offending stocks?
Conditions now look are similar to what they were last July - not!
Disclosure: long FAZ