The sellers started right out of the gate. The overall damage to SPX was not that severe, but a lot of stocks fell below their 200 DMAs. The breadth was -58%. New highs were only 77 while new lows were 205. Formerly lagging sectors like the transports, SOX and energies saw some buying. I think that was a defensive move by money managers that must stay invested. I don't think there was really anything positive for the market that happened today.
AAPL is having a negative reaction to their earnings and that has taken the futures down a bit after hours. We ended the day with a red bar, but we need a lower close to confirm a new micro down trend. That could always happen in the night if the bulls don't show up. Since we tested the high before we turned down today the odds are probably pretty good this bounce is over. An up day tomorrow would be normal coming off a high. Unless it is super strong it would likely be a better time to hedge then to go long.
We have been getting those bounces off the 100 DMA for two years now. However, this year the market has not been able to make forward progress from those bounces. That has led to many more bounces then we had the last two years. Those bounces are an unnatural act for SPX so some group has been responsible for them. What happens when they stop buying there? What if they are still heavy long and want to bail? I am not sure I have ever seen a retest of the highs with internals this weak. If we turn down now I think it very unlikely the 100 holds. I have only seen internals like this in 2000, 2007, and 2011. The 19% drop in 2011 was the smallest one of the bunch. No time to be complacent.
Bob
No comments:
Post a Comment