One could build a reliable indicator based on when I take time off work. Almost without fail, when I take time off to get away, the market does strange things. I was home sick during many of the crash days of 2008 and was also home during many of the surge days as well. I tell you this because I am right now trying to get in a short vacation with the family, and so of course, the market is going to do strange things.
As I was loading the boat up to head out to Morris Island Lighthouse, I saw the futures down big and then saw the Dow down over 200 points. Upon returning to dry land, I noted that the market had a large intraday reversal, and closed down only slightly beneath Wednesday’s close.
The following are other important technical features of Thursday’s action:
- SPY traded beneath the 200 day moving average but didn’t close beneath it.
- The gap from Tuesday, 6.21, was filled.
- SPY volume surged and recorded the highest number of shares traded since the last bottom on 3.16.11.
- Volatility, as measured by $VIX, jumped, but did not close above 20.
I have recent studies which address all these issues, and since we are loading up the boat again to head to the north end of Kiawah Island, I’ll just link to those studies so I can get back out on the water. My gut feeling is that we are still working on a tradeable bottom.
What Happens When the Market Closes Beneath the 200 Day Average?
Volume Surge Suggests Bottoming May Be Occurring
You are in South Carolina, huh? My fund has an office there, near James Island, I think… It is about 10minutes from downtown Charleston… awesome place!!
Chivo, I lived on James Island for 4-5 years and lived out at Folly Beach. In college, lived downtown on the peninsula. Awesome places. Home to me.
Looking at a chart of SPY, it looks almost exactly how it did 1 year ago. And during June, July, August and November of last year, the market traded down to flat. From Nov/Oct until now, the market has traded up. So my feeling about bottoming is that it will be a long, choppy, and boring period.
Agreud. Volatile and range bound bottoming.
Great post sir. Thank yeu. (sic)
I lived in Savannah for 5 years. Loved it and want to move back.
Interesting that we are just about to touch 200 day, and lower bollinger band.
Hopefully we do get multiple closes just above 200 for abnormality to be removed and a reasonably confirmed tradeable bottom.
Love your work man!