SPX ended the week right above the Sept. high which could provide some support. Breadth was -60% which wasn't all that bad considering the magnitude of the move. New highs dropped down to 24. New lows shot up to 217. Retail stocks got really hammered.
The futures smashed through the 100 SMA. This is what happens when the ADX is high going into a reversal and the market does not retest that high or low. It reverses with a lot of gusto. The next support on this chart is the 200 SMA (another 20 points lower). Normally after a string of blue down bars like this the first non blue bar marks a short term bottom. Maybe that happens Monday.
The green count is as low as it was back at the Aug. low. The last time it was this low before that was in 2010. Even the crash in 2011 did not get the count quite this low. In other words this is an extreme short term over sold condition.
People are noticing all the stocks getting clocked. It looks like the psychology of the market is changing to me. The fundamentals have turned negative and people are taking notice. I heard a die hard bull say he was having trouble finding reasons why the market might go up. I heard talk on CNBC of a huge drop in truck and railcar orders in Oct. The kind of drop only previously seen in a recession. There seem to be things happening that historically have been associated only with a recession. All this is happening while the genius economists at the FED are telling us the economy is doing moderately well. The data is clear that is not true. Are they knowingly lying to us or just plain stupid?
We have an extreme short term over sold condition at a potential minor support level. That could equal a bounce/consolidation early next week. It seems unlikely we make a lasting bottom here though. If the market does not stop the bleeding in this area it could start to get really violent again.
Here is a look at the latest retail sales. This certainly helps explain the carnage in retails stocks.
Source
This is a long period of negative YOY sales. I don't see anything here that will help alleviate the increases we have seen in the inventory to sales ratios. You have to think more production cuts could be coming.
Food for thought articles.
Buy Low And Sell High: Investing Strategy Thoughts
Moody’s Warns about Credit Crunch, Unnerves with Parallels to 2008!
There are changes to the R2000 trend status tonight.
The market and sector status pages have been updated. Have a great weekend.
Bob
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