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Confidence and Conviction

Posted By Barry Ritholtz On August 13, 2003 @ 10:02 am In Finance | Comments Disabled

Kevin Lane is a friend who also is the Chief Market Strategist of Technimentals Research Group [1]; His comments today as to the present consolidation period are telling:

“Recent light volume trend suggests there is no confidence and conviction on the part of investors [traders]. We have bounced from a several day oversold condition (techs) – however until volume has a real upside deviation from 6 month average volume trends expect more choppy trade. It appears recently that price has hit some equilibrium between buyers and sellers hence the range trade. A deviation from trend on volume would suggest that the balance of power (between buyers and sellers) has been tipped in a definitive direction. Until we see that real breakout in volume relative to average trend, it is best to stand aside and observe.

Highlighted today are two indices (Semi’s and Gold); The Semi’s appears near a crucial inflection point that will soon decide its’ next directional move, while Gold, appears to have broken a large weekly triangular formation as part of an enormous base and now looks to have good upside potential.”

Disclaimer: Kevin’s audience is institutional traders, and as such, are likely to be much shorter term in nature than the typical investor. Trade at your own risk.

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[1] Technimentals Research Group: http://www.redtechresearch.com

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