The point drop doesn't bother me.
I'll react if the indicators turn south because of this. Today's action did slow down the OPTI from reversing up to X's but it did not reverse down.
I will be checking to see, and everyone should do the same, if the BPNYSE or the BPOTC reverse down (will show on charts tomorrow, database is still calculating numbers).
If the indicators reverse back to negative then I'd say we have some more down slide.
With PnF there a couple levels of indicators. There is the Main Coach, the NYSE BP that tells us the main direction of the market. It has been in X's for a while so we are longer term positive. Meaning the overall market direction is up. Also, we look at the level of which this indicator is at, percentage wise. Currently it is around 38% which is in a low risk territory. If it was above 60% and in danger of reversing down a day like today would raise at least one eyebrow with me.
The Optionable BP is more sensitive than the NYSE BP. It has been in O's for over a month telling us that on a short term basis the market will be difficult, pullbacks, dips and base building in a larger portion of stocks than normal. It was very close to reversing up after yesterday but did not. Today it got hit a little.
The bottom of this category are the two very short term, trade like indicators - the 10 week and the High Low. Both are in a column of X's. These just reversed up recently telling us that we can begin looking for trades to the long side - but, with the OPTI still in O's, negative, we look for pullbacks.
Today was a pullback.
With the NYSE BP in X's and the OPTI in O's I look for volatility. It does the market no good to go strait up, and the same with stocks.
Today just gave back a tiny bit of profits.
Concerning the Dow it did break major support and I really don't like that but it does have more support close by (10900). The Nasdaq is now on a shakeout pattern which usually is bullish.
I'm not concerned about the market because the indicators are still in a low area. If this was happening with the sectors and the indicators above 60% I'd be very concerned.
The DJBB which measures bonds has been on a sell signal since February and that thing was dead right when it came to bonds. Gave another sell signal on Monday which means we are no where close to the end of interest rate worries. As long as there are worries the market will react.
Stocks like CSCO and MSFT don't really look bad at all. They gave back some of their huge runs of late. Neither are even close to breaking support and quite honestly needed a pullback like this to add some footing to the chart. People don't like to hear that because they want stocks just to move one direction, up, but we all know that doesn't happen. Remember how many times you have heard yourself or people say "if only it would give me a chance to buy it..." Well, here is that chance. The thing is people get spooked. Like my Dad, he thinks a stock that pulls back is a stock in trouble and would rather buy a stock that has moved 20pts a day for 5 days because it may continue that trend. How do you know however if it is going to continue? Nothing to judge it by. But, if a stock pulls back to support you have a guide. Something to judge the entry point.
Of course fundamentals should be considered first.
The large cap stocks certainly got hit which I think was needed. Now we see if they base and continue forward. The Russell 2000 did indicate that the momentum has shifted to small caps. This has happened before only to have the trend change back to large caps quickly.
I don't try to predict what is going to happen. I go by support areas etc and what I saw today was a pullback to those areas and a "breather" in the market.
I would suggest people have stops for now but panic selling I don't see necessary at all.
Cracks me up the say it is the largest recorded point drop and they are surprised. Wasn't it just the other day they were talking about the largest recorded move up? No one complained then. Well, if the Nas can move up that fast it can give back half of that and be OK.
Profits must be taken. Relief must come in. We'll see in a while if it really changed anything in the market. |
