You know things are bad when 3 to 4% losses feel like a victory for the bulls. Today was the type of day that many traders, myself included, like to see when the market's trying to bottom. The market sold off extremely hard for most of the day and then we got a "snapper" rally in the last hour. The Dow jumped almost 400 points from 3:00 to 3:30. That type of rally can really get the bears on the defensive (buying), especially those who over-reached.
Speaking of over-reaching bears... I always like to watch my site's referral logs on days like today and I was a little surprised at what I saw today. For most of the day my "inverse ETF" list got a lot of traffic. Usually when I see over 25% of my traffic going to that page it's a good sign of a short-term bottom. I checked my logs around 3:00 and at that time 74% of my traffic was from people looking for inverse ETFs.
If you're looking to initiate shorts with the indices down over 7% on the day you must think the market's going to zero. So now we've got a situation where most of the people who initiated shorts during the day are losing money. They could become very motivated buyers if we get some follow-through on the late afternoon strength.
Given the action we had today it's not surprising to see tons of hammers and other candlesticks with long, bottoming tails (wicks / shadows). Just look at how far below its lower Bolling Band the Nasdaq dropped today. Cramer clearly wasn't the only one who capitulated today.
The S&P had similar price action to the Nasdaq but its volume surge wasn't as impressive.
For what it's worth, T2108 closed at 4.27 today.
No changes
| 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.
Thanks for the market recap.
I am wondering how SSO trade went. Did you get stopped out, did you chase it later?
Thanks,
Nick.
I'm still in it. It's in my IRA and wasn't a day trade
This feels like a total win for the bulls to me. I feel like the bottom is in.
Then again I bought a lot of stocks today so I'd like for that to be the case!
Mike,
I made the same trade you did in my 401K, except I did it on Sept 29th, the day of the 750 pt drop. In retrospect, I wish I would've waited, but I GOTTA BELIEVE the bottom is now in. If it's not, God help us all :)
Steve