Thursday, October 27, 2005

Heavy Selling Hits Market But Only One Index Suffers A Distribution Day

Today was ugly, without a doubt. Great heads-up by a couple of readers of this blog. You guys were on it, I was off. I still don't think there is too much downside left with how negative everyone is but I guess we will find out.

Anyways, as for the markets, the techs and small caps got whacked. The SP 600 was down 2.3%, the Sox down 2.7%, and the Nasdaq was down 1.7%. It doesn't get much uglier than that but there was one odd divergence. Volume. Volume was lower across the board, besides the SP 600 which suffered a distribution day. So far price is still rising on higher volume and falling on lower volume. Lower volume doesn't dismiss how ugly today was but it showed that institutions weren't stepping over each other in huge block trades trying to dump their shares. Besides that we still haven't failed the lows of the recent rally so the rally is still technically not dead. Though there is a lot more charts that don't look good at all, so that could change with further selling.

Still the market looks a lot weaker than it did after the close on Monday. The SP 500, 600, and Nasdaq are all trading below their 50 and 200 day moving averages. Also all have recently cracked key support levels at the 200 day moving average. All of those facts show that the market indeed is weak.

What is funny, however, is how much negativity there is out in stock land. Chat room bears are getting more aggresive with their talk and the markets are getting quite oversold again. I have already mentioned the Put/Call, Newsletters, and VIX contrarian readings so I won't go over them again.

I took a small hit today, but oddly most of my swing longs still look pretty good. Looks like October will be a "red" month for me, after all.

New Swing Longs: KEX CKFR RDTA SYNT

Longs Outperforming Market: REGN PRLS(205%) RNWK SWIR

New Swing Shorts: SRDX ERES CNX TRID ROP

Shorts Outperforming Market: PRAA ECA

Small Stocks On Radar Screen: VNX FUR ICTG CWBS RLH

Disaster Long: PPDI (-10% gap down) It happens, in choppy markets

3 comments:

Anonymous said...

I don't want to steal your thunder but I keep it short. I finished my 2000+ scans awhile back. Bears are in control. It will take some time to repair the damage.

My list of shorts if they breakdown tomorrow:
FLS MCK CMCO EGN USG KBH MTH ENER TSRA

Joshua "MauiTrader" Hayes said...

These charts do look weak but where is the volume?

That is the most important ingrediant you need for a short. You need the institutions to be selling the stock, when you are shorting. Without volume these stocks are just drifting lower and if buyers come in the reversal can be quite hard.

However, the charts do look weak, across the board. I still would like to see sellers in them more. TOL MTH KBH are late in the game, I already shorted and took profits from them. More downside to come, probably, but they are very oversold now.

Joshua "MauiTrader" Hayes said...

You can steal my thunder all you want. It is all good.