Tuesday, May 15, 2007

Another warning sign from $XBD

For those who are short-term oriented, the broker/dealer index ($XBD, components), broke its near term trend line today. Recall that it flashed a warning sign just prior to the Feb 27 mini-crash.

The recent weak market internals (e.g., poor advance/decline numbers) with the Dow leading the charge makes me cautious here. I still think there will be one final speculative buying phase in this rally, but near term looks to be heading down. I hedged with a few puts near close today.