*** TA Update ***
The market fell sharply on Wednesday, as the Dow fell as much as 697 points (8335 LOD), to end down over 500 points to 8519, and the Spx fell to close just below 900 at 896, with a LOD of 875, just above a prior low (865). So that 865 level will likely be tested as could 839, the intra-day low.
The McClellan Oscillator whipsawed by falling below the zero line after having risen above it just two sessions ago, so the Summation is now falling again. The lack of a follow-through on Tuesday was a concern, especially the fact it lacked strength late in that session, after Monday's light volume rally.
While it certainly seems the market is trying to form a bottom range, the risk for lower prices is once again high due to the technical breakdown today.
Crude oil and commodities fell sharply as oil got as low as the 66's intra-day, and while it closed a little higher, it couldn't hold support at 68, and that portends possibly the low 60's now. It seems that the 50 area is not out of the question in the weeks ahead.
Oil, mining, ag/fert and material stocks were among the biggest losers today, falling 8-16% for some stocks. The global economic slowdown, the perception of demand destruction, and enormous redemptions for funds, has triggered panic selling.
I am still waiting for a true capitulation, with very heavy volume and a bullish reversal, but a bottom doesn't have to happen that way. But until we see that, it is risky to get long, as the market keeps making a series of lower lows.
The VIX rose sharply again to about 70 today, and that is bad news for the ST. Selling seems incessant and unrelenting, especially in commodity-related stocks. The VIX might go to 100 before a bottom is made.
Some drug and consumer staples stocks seem to be the safest but they will probably be hammered before the bear mkt can reach a tradeable bottom.
I still look for the possibility of Dow 7400 or 7197, and Spx 783 and 768, or for a selling climax, or both simultaneously.
One thing that people forget is that shorting is a factor along with redemptions, and combined they wreak havoc on longs.
Any bounce on Thursday is likely to fail, imho.
regards,
drbob |
