A morning gap that sent all the indexes into rally mode soon gave way to one of the ugliest selloffs I have seen in a long time. The selloff sent stocks down all the way till the close, where the market indexes finished near the lows of the day. At the close all indexes were down, for the fourth straight day.
The SP 600 and Dow Jones Industrial Average took the biggest hits with a .9% loss, the SP 500 fell .4%, and the Nasdaq fell a small .03%. The only index that closed in the green, on my screen, was the Nasdaq 100 with a .06% close to the upside. The fact that the markets ended down less than 1% on all the indexes does not minimize the major damage done. At one point during the day the Nasdaq had a 1.8% gain. It reversed all of it! Ugly.
Volume was higher on both the NYSE and the Nasdaq as both indexes suffered another distribution day. This gave the Nasdaq its 6th distribution day since the rally attempt started 17 days ago. The NYSE has suffered 5 since then. IBD agrees with me that this is a distribution day on the Nasdaq due to the severity of the reversal on the pickup in volume. This is not a healthy sign of a market trying to establish a follow-through day. The mere fact that we are holding above the rally attempt lows does nothing to hide the fact that this market is under major distribution.
Breadth was negative on the NYSE by a 9-to-7 margin and by a 3-to-2 margin on the Nasdaq. Not bad but with the reversal after such huge gains what did you expect.
What was interesting about today's selloff was that the big cap indexes led to the downside. This goes to prove that in a downtrending or bearish market there is no safe place to hide. All stocks eventually get hit. Now it appears the big caps are ready to catch up to the Nasdaq weakness. Cash is king right now. The only trading that should be done should by professionals who short bearish markets and professionals who are going long defensive stocks in defensive sectors that go up when the market goes down.
The past week has seen some nasty bearish reversals for the indexes. You can see this clearly on the candlestick daily charts of the major indexes. You see the tall tails at the top of the price range with the boxes near the lows. That is not good. Period. Keeping it that simple in picture form is the easiest way I know how to say this market is not acting well at all. Gap up, gains, reverse, close lower, and gap up, reverse, and then close lower again is not good. This is bearish action.
There are some "silver" linings in the precious metals sectors but the individual stock charts are UGLY!! Ugly, I tell you! I wouldn't touch most of these charts with free money to throw away. Yuck.
August is the slowest month of the year and historically is the weakest. This historical data along with the current action of the market should be enough reason to be in cash and on the sidelines. I don't know how else to say it. The only thing positive I can think of right now is that it is pretty bearish out there but I have a feeling there are still some longs waiting to sell on upticks and on those upticks a lot of bulls will probably call the bear market over. This is normally how long downtrending markets play out. Overbought conditions get sold and the markets gets more and more oversold.
Great luck out there and I will see you at Investors Paradise.
New Swing Longs: NONE
New Swing Shorts: VOL KG RMK KMR STNR HAWK CAT ARII CBG CPE CFC
Longs Outperforming: AKAM-141 CVO-122 TYL-25 BWP-25 CTCM WNR JTX CXW MA TP DJO GISX
Shorts Outperforming: KNOT XPRSA GTRC MAS TXRH POOL IYT NTE CSX RS DSL TZIX FDX NCI RRGB CRXL JOYG USG WSM AMAT RES ZRAN MAFB BTH APOL GYI XNPT PBE PII RCNI VO GE WFSL ESIO AME HTLD BLK HCBK VXF VB WTI WERN FRC WTFC AF CNI X STLD CPF MAR AGP LDSH LHO HYDL IJT IJS ARO IART SBL BEC SIGI ATPG NC GSF CBST LAMR GKIS CCO
Completely Cover Short: FWLT
Stocks On Radar Screen: DIGE DK RAH WEL CAPA SRVY AEZ
No comments:
Post a Comment