What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...
I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).
T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.
Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.
Everything's down again
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Down | Down | Down |
| Intermediate | Down | Down | Down |
| Short-term | Down(-) | Down(-) | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Just to add, volume was relatively tepid given the scale of losses (especially given what has passed under the bridge).
Sellers exhaustion or worse to come?
One more week of vacation left!
DJF