This morning on CNBC, right after the disappointing jobless claims data hit, one of the commentators said "if *this* doesn't take the market down, I don't know what will". He was saying that the data was a bad omen for tomorrow's unemployment report and that folks shouldn't have to wait around until tomorrow morning to take action and sell. I'm not sure if that data took the market down on its own though. Things were a little weak early but the selling really intensified after the ISM Manufacturing Index was released. There have been some disappointing data piling up over the last several sessions and it's really starting to show in the charts.
Today's drop did a good bit of technical damage. All the major indices broke their March uptrends on increasing volume. Those indices are now closing in on their 50-day moving averages, which should be pretty good support. If the jobs data disappoints in the morning we could be at those moving averages in a flash.
LQD, which is an investment-grade corporate bond fund had my attention for most of the day. It kept popping up on my scanner because of its surging volume. While its percentage loss wasn't that big it did break its March trendline. I doubt I'll ever trade something like this but I just found it interesting as a change of character for the market.
All the short term trends are down and the intermediate trends are in danger of being downgraded as the indices approach their 50-day moving averages.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Up | Up | Up |
| 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.
Mike,
It has been brewing for a while now. The up days on lighter volume and down days on heavier volume have been telling my story. A break of the 50-d is a major confirmation of sellers taking control.
Hey Mike,
Thoughtful analysis.
On your trend lines, consider supplementing your candlestick charts with some line charts based on the closing price. Doing so will reveail that the March lower trend line and the 50 day MAY align nicely and that we have not yet broken trend. Chances are strong that we will see a bit of a bounce at the 1025 area. Price, trend, and 50p MA converge.
A break at that pint would indeed be serious!
Mike,
Today was ex div for LQD & JNK ,but but the volume on both makes the ratio chart in this article all the more interesting http://online.barrons.com/article/SB125442609384657205.html?ru=yahoo&mod=yahoobarrons
nice find on that corporate bond fund. almost epitomy of technical uptrends.
The two indices that caught my eye today were the Russell 2000 and the SOX. The SOX really took it on the chin - the 50-day MA will be a big fight given it's all of 1 point away.
Can't see the tech averages holding their 50-day MAs if the SOX loses any more ground here.
Fun fun fun!
DJF
Nice to be short today.....futers dipped