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Thursday, October 11, 2018

Daily update 10/11

Got some volume now.  SPX closes below the 200 DMA.

That looks more like a possible volume climax low.  The bad thing was the TRIN was only 1.3.  The breadth was -77%.  New highs fell to 8.  New lows climbed to 513.  You have to back to the early 2016 low to find more new lows.  At 2:30 a massive sell program hit the market and sent the VIX over 28.  The buyers stepped in to rescue the market at that point.

Quite the spike down.  I see the -DI line has crossed below the ADX line.  When oversold like this that often means it is time for a bounce.

Nice oversold reading on the red count now.

This high volume sell off might lead to a bounce.  However, the weakness of the rally into the top suggests it won't be the off to the races variety of bounce.  I would think sellers would sell any bounce from here at some point.  Some volume climaxes are three days so be aware tomorrow could still be down.  It probably rests on the shoulders of some key financial stocks that are reporting earnings in the morning.   XLF was down almost 3% today so I guess investors must not be expecting those earnings to be great.  That could leave room for a positive surprise though.  Gold and bonds were both up strong indicating a flight to safety trade today.  Despite the low TRIN reading there must have been at least a little panic in the air today.  If tomorrow is down big again that would present a problem.  Big down Fridays after down weeks have preceded crash Mondays like 1929 and 1987.  However, they have also seen big gap up reversals on Monday.  Lets hope the market lets us avoid that conundrum and is up tomorrow.  Next week is option expiration and is usually good for a bounce.


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