What a difference a day makes. I wish I could say that i saw this reversal coming but I didn't. Like I said this morning, I thought a bit of consolidation was likely but this selling came out of nowhere. But that's par for the course with this market lately. I feel like I've been flipping the trend table every day for the past two weeks.
We had distribution days across the board today. The Dow and S&P 500 look like they're following in the Nasdaq's footsteps by making false breakouts to new highs. The Nasdaq did that almost 2 weeks ago and the Dow and S&P took their turn today.
Update: Here are some interesting comments from tonight's Worden Report (emphasis is mine):
1362 Russell Stocks Plunge on Increasing Volume ALL of the important averages were down more than one percent today - the first time I can remember that happening since I began keeping track just a few years ago. ALL of the breadth groupings were negative today, and ALL of them had more declines today than they had either declines or advances on any other day this week. For example, 2359 optionable stocks declined today--more than the 2122 decliners on Monday and more than the 2270 advancers on Wednesdays. There were 993 HalfPoint+ decliners today--more than the 581 decliners on Monday and more than the 686 decliners on Wednesday. There were 91 decliners on the Nasdaq-100, dwarfing both the number of decliners or advancers on any day of the week.Of the Russell-3000, 2376 declined, 1362 on increasing volume. This is a lethal reading at what is potentially an early point in a decline. Yesterday 2288 of the 3000 rose, but 1386 of them on declining volume, which is bearish (a figure I neglected mentioning in yesterday's report).
We had fireworks on the downside this week and fireworks on the upside. But it all climaxed in today's broad plunge, which defined the week.
The Trend Table shows that all of the Major Averages are caught in LAs (lateral congestion areas). These were somewhat subjective decisions and I probably could have justified classifying everything as DN. I'd rather be conservative in such decisions, but I do suspect they will all soon be in nothing but DNs.
Still, I've never seen a market more capable of changing its colors so quickly and so persuasively, with little or no warning. I have enough egg on my face to raise my cholesterol 100 points.
Well damn! :-D
Charts of the indices as well as some individual stocks are below:
Looks like I was a day early on yesterday morning's gap getting filled. It refused to cooperate yesterday but the bears closed that gap today. The Nasdaq made a bearish engulfing pattern and is now back below its 50-day moving average. It also looks like it's tracing out a pattern similar to a falling three methods. Bulls really need to defend this week's low.
Looks like a failed breakout on the S&P 500. That was a short trip above that magnetic 1430 level.
The Russell fell back into its congestion zone.
Dolby Laboratories, Inc. (DLB) something like a bear flag or a wedge. I'm looking for it to fall out of that pattern.
Sigma Designs, Inc. (SIGM) appears to be stalling at resistance.
My old buddy Rackable Systems Inc. (RACK) made an NR7 today...
Apple Inc. (AAPL) is also making a bear flag and appeard to have just kissed the 50-day moving average goodbye.
Lots of changes again...
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Up | Up | Up |
| Intermediate | Lat(-) | Up | Lat(-) |
| Short-term | Down(-) | Down(-) | Down(-) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
Your analysis is right on! Feels like the NAZ is going to crater.
Hi Mike...
I'd love to say that we have a bearish engulfment in the SPX today but we know both know we can't use candlesticks on listed indices that always open unchanged. As always, I enjoy reading your blog..
Kevin
Up or down is fine with me... as long as we finally stop this sideways action we've had all month!
BTW I just noticed you got mentioned in the Feb issue of TAS&C (article about maoxian.com).
Mike, I know you read a lot of charts so I have a question. If you're looking at a 60 minute candle chart, does one candle each day actually consist of 30 minutes? or does the last (or first?) candle of the day just pick up where the last day left off? I hope you understand my question. Thanks!
"I’ve never seen a market more capable of changing its colors so quickly and so persuasively, with little or no warning. I have enough egg on my face to raise my cholesterol 100 points."
I know the feeling well. This market is the most schizo I can ever recall. Euphoria one day and panic the next, rinse lather and repeat... UGH!
:o
Uh oh, a bunch of comments on a down day, Bill is gonna love this :))
@ Jamie -- great minds...
@ Kevin -- True about $SPX but SPY didn't make an engulfing either. It's small gap down saved it. Still, today was a very bearish candle.
@ Richard -- I totally agree. Any direct but sideways. That said, today was one of my best days in a long while. \:d/ It paid to be a day trader today.
@ Mike -- In eSignal, the last candle of the day is 30 minutes.
@ZenTrader -- yes, it sure is schitzo. I'm glad I'm not the only one who's been thinking that. I swear if I have to flip those short-term trends in the trend table again tomorrow I'm gonna...
Hi Mike-- I enjoy your blog, keep up the good work. Just fyi, the Naz didn't have a distribution day today, although it sure was ugly. Wednesday's volume was higher than today's (Thursday). Also have to second the no engulfs on $SPX and Dow (but plenty of bearish engulfing bars elsewhere, to be sure). Cheers.
I am loving it. Told ya.
\:d/
Mike,
Mike,very predictable, the choppy behavior, as i said my indicators indicate choppy behavior and the market heads down. This is classic profit taking by th ebig boys, they suck in traders, via "false breakouts" and then dump heavily into any surge. Once the distribution and profit taking is over, they will pull all support out, unit the market hits bottom agian, wheneever they determine the right time for that too happen!
Alan, welcome back. :d
Thank you! I love your web site!
:d
8-|:((
Crammer had a good show, about looking for sectors! It jsut not the sector it is the fashion of the sector. He talked about his bum recommnedation of CSCO and MSFT, back in 2005, when it was really a gadget rally. As a daytrader, that is something to look at for, although i do feel the market is overdue for some type of correction fairly soon, dont know exactly when it will come, but i like keeep an eye out for it, that way yuo dont end up on the wrong side of a trade!
This tug-of-war is setting up for a big break-out from the recent channel. The questions is, in which direction?
Over a dozen!
:d/