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MARKET WRAP UP 08/11/10
Starting with the futures tanking last evening, the bears delivered a sound thrashing from bell to bell today, with the S&P 500 closing down 2.82% to 1089. Actually, the bears have extended their supremacy into the after hours, as the $CSCO earnings and conference call helped to push the futures down as low as 1073. Regardless of the reasons, the simple fact is that today was a very ugly day for bulls. Breadth was horrible, and volume was the heaviest that we have seen in weeks. Perhaps what was most bearish was that the bulls could manage no intraday rallies longer than a few minutes, and they were laughably weak ones not just in terms of time but also price.
Despite the hearty victory for the bears today, the broader technical picture remains mixed. Starting with the updated and annotated daily chart of the S&P 500, we can see the bulls are hanging on for dear life just above the 50 day moving average.
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Continuing with my theme of relative weakness in the Nasdaq Composite and Russell 2000 (small cap stocks), we can see how much damage was done to their charts today. If the bulls are going to prevent a retest of the July lows, they had better get their act together soon.
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The relative strength in the Dow Jones Transportation Average took a huge blow today, as the updated daily chart illustrates below. Again, a quick recovery by the bulls is essential.
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By far, the healthiest chart remains the emerging markets ETF, $EEM. Despite the selloff today, the ETF is at a key prior resistance level. Again, as with the charts above, if the bulls can rise to the occasion, this will have been a strong buying opportunity.
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The widely watched financials suffered an ugly gap lower on their daily ETF chart. However, all is not lost yet, as there is plenty of support below. The financials could still be forming the right shoulder of an inverted head and shoulders bottom.
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In sum, the steep uptrend since July 1st has now been broken. However, that the does not automatically mean we will see a fresh leg down to new lows. I know that can be frustrating to some of you who come here looking for easy answers. However, the market does not offer easy answers very often. Accordingly, you will find a bit more analysis in my work.
What? No easy answers? Phooey! 🙂
Thanks for the update. We’ll see what the overnight brings.
sums it up very nicely, thank you very much
What I appreciate about your analysis is your consistent objectivity. Yes, it attracts fewer comments compared to.other marquee names here, but your analysis contains far better substance. When I need a laugh, I go read Fly.
Indeed!
Thanks Chess, been away for a few days R&R and yours was the first blog I looked at. I left before winding up my position in EDZ and was in the Jurasic age from a communications standpoint. Glad of it, as I managed to book some gains today and will now look at a bull hedge given the OS of the PPT. I will be off to Japan in 2 weeks as I do a boatload of biz there, and will be interested at the “read” I get from land of the Sun Goddess.
Keep up the great work.
Everyone–thanks for all the kind words. I appreciate your loyal readership greatly.
Good Call on that YEN….doing a little flip flopping now but..(the new normal)…ez to see the struggle carries on