Well I pretty much nailed the top with my previous post. The NASDAQ never even made it to its 50-day moving average . It stalled just a couple of points shy of that line and then sellers pushed it down to make new lows on the day. Today’s losses puts the NASDAQ down 5.5% for the month of July. Things are starting to look real ugly. The Dow closed below its 200-day moving average today and the S&P 500 is closing in on its 200 DMA.
The only good thing I can think of about this selling is that it’s coming before earnings season really revs up. The market may be pricing in a somewhat pessimistic earnings outlook so we may get a rally if the reported numbers are decent. (Are there enough ‘mays’ and ‘ifs’ in that sentence?)
There were a good number of inverted hammers made in individual stocks today, but I’d still rather see hammers, which I find to be a more reliable reversal indicator. Nonetheless I still think the risk/reward is better on the long side right now. This is basically the opposite feeling I had over the previous two weeks when I was finding nothing but shorts. Hopefully if I’m right I’ll be able to hold on to some stocks this time.
