Tuesday, September 1, 2009

Quick Market Recap…

On the day, the DOW finished down 185 points (1.96%), the S&P lost 2.21%, the NDX was off 1.81%, and the RUT gave back 2.45%. The XLF lost a whopping and well deserved 5.37%, IYR lost 5.1% - again well deserved, oil lost 2.52% closing at $68.20, gold closed down only a little and is still inside its large triangle. The dollar closed up significantly and bonds lost a little.

The selling started in Britain and the rumors flew that a bank was in trouble over there. Then Credit Swiss downgraded the U.S. markets saying that they are over valued - which is an unusually true statement. Then we have Goldman playing games with Wells Fargo, and it looks very much like Central Banker infighting to me, LOL. Who knows, but whatever it was, this type of action goes to show you how precarious the markets are at these levels. Not a great place to be risking your wealth if you ask me. Again, this is what happens when the rule of law is not followed and there are no adults in the room; the children start to get into trouble.

This was the first time in 3 months that we strung together 3 down days. Today was McHugh’s best fit for a turn date, the top was in on the 27th and could have been it, but for now he is sticking with his upside story. It sure looks shaky to me, at best though, following today’s action, a 93.8% down day by volume.

Below is the daily chart of the SPX. Note that we closed back under the 1,000 level. 990 is the pivot below, 1,018 is the pivot above. Fresh sell signal on the daily stochastic, price is below the mid point of the daily Bollinger and is thus likely to make it at least to the bottom Bollinger which is currently located at about 980ish:

Looking at the DOW daily the same technicals are true plus you can clearly see the bearish volume pattern of higher prices equaling lower volume and lower prices equaling higher volume. The long term trend of this bear market rally also shows the same bearish volume pattern. This move has already retraced slightly more than 61.8% of the last wave up:

The VIX broke out above it’s recent downtrend line. This is BEARISH for the market as a whole:

Several of the Point & Figure charts reversed today and produced bearish market targets, or in the case of the VIX, a bullish target for the VIX of 40:


Oil tripped a bearish target of $62 on the P&F chart:


And the NDX is the first major index to trip a bearish target in quite some time. The rest have not as of yet.


Overall a pretty bearish day, but we finished oversold on all the short term stochastics up to the 60 minute timeframe and would thus expect some sort of pause as nothing ever moves in a straight line. That said, it could be that people figure out that’s their queue and decide to exit sooner than later, we’ll find out, but it’ll be interesting no matter which direction Goldman tries to play it! Again, rising volume is confirmation and the volume of reality will always overcome low volume manipulation.

Anyone figure out my not-so-subtle theme music for the past couple days?

The Alan Parson’s Project – Games People Play: