Monday, February 23, 2009

End of Day 2/23

Well, it wasn’t black Friday bad, but it’s beginning to feel like it.

On the day, the DOW closed down 250 points (3.4%), the S&P lost 3.5%, the NDX stopped hiding the money and gave back 3.7%, while the RUT led the way down by losing 4%. Amazingly, the BKX closed flat, the XLF only lost 3.5% with C and BAC both gaining substantial percentages on the back of more government involvement.

Internally the NYSE was 6 to 1 negative with 79% of the volume on declining issue. Interestingly, the number of new lows fell significantly from last Friday on all the indices. That’s a bullish divergence.

Today sealed the deal and does not leave open to debate the bear market continuation. The bulls desperately needed the S&P to hold its November lows and today it closed below the closing low in November and is just 2 points away from an intraday low as well. Stock prices are now back to where they were in late 1996, well clear of the 2002/2003 pin lows:

If you are wondering why, it’s because confidence has simply left the building. People now realize that there are few ideas that have a chance to make the outcome better. That’s what yours truly has been saying all along. The math doesn’t work and therefore change is right around the corner. Get ready, because the ripple effects will be shocking. The black hole that is AIG just grew by another $60 billion. It just boggles my mind that we are propping that bottomless pit up. The harder we try, the worse it will be for everyone except those who are escaping with our money at this time.

Okay, let’s look at a 3+ month chart of the SPX daily. Here you can see that today completely engulfed Friday and down she went breaking below the bottom of the very steep down channel, landing just above the pin low of November. Since the closing low today is well below the closing low from back then, most technicians consider that a clean kill. The next long term pivot point is just beneath at 734. That pivot is also coincident with the target if the current wave 3 equals wave 1 down. Could go farther than that, but we should probably get at least to that area. Of course all the oscillators are well oversold, a place where crashes occur and that’s exactly what this is – a slow motion crash. In the past ten trading days, the S&P has lost 15% of its value, and in the past six it has lost 11.4%:

Same story on the DOW. Very bearish, pretty high volume, but not capitulation volume or candle. Well below the bottom Bollinger, playing here is getting risky as it’s pretty much continue to crash or bounce, the normal indicators are not much help:

The NDX got clobbered today. Here’s a one month chart showing a huge nasty red candle. This has been the story of every descent, heck, it was so predictable that even Doc told you it was going to happen and there it is (lol). Hey, you must find humor where you can – you won’t find it in that chart otherwise:

It’s interesting to me that the put/call ratio is still falling even though prices are plunging. That’s just showing too little fear and too little respect for what I’m sure is going to prove to be one of the worst bear markets of all time. Hey, if you are staring in the face of a charging grizzly, being scared is rational and sane. Not being scared means being lunch, and you should pay attention to this indicator, because less than 1.0 at this stage is not what I would expect:

All in all pretty bearish bear market. Remember that those really horrid pennant targets are in play still. No, it won’t be a straight line, but prepare yourself, bad things this way come!

As we approach the threshold of the DOW 7,000 level I was just thinking about all the people who I have warned that this day would come. Very few believed. Those who did not are now a lot less wealthy for it.

While we haven’t had a real all out blink of an eye crash, and even though it’s not Friday… I’ve been holding onto this tune and smashing those key technical areas just gives it that Black Friday feel, but without the fear – lol!

Steely Dan – Black Friday: