A perfect storm of bad news today left all sectors down except for gold, oil & gas. The indices didn’t even wait for the oil inventory report or the Beige Book to break yesterday’s lows. Each of those reports just gave sellers more reason to sell. You know things are bad when you see many indices closing below their lower Bollinger Bands. As you’ll see that happened today.
The transports and airlines were some of the worst performers today. It’s been about three weeks since I was asked about the transports and posted this chart:
I wrote back then that I thought it was too soon to draw any conclusions. I noted that its 50-day moving average and January uptrend were still intact. Well that changed today and I have no problem now declaring that the transports are broken — at least in the short-to intermediate term. It’s still above its 200-day moving average so I expect long-term investors/traders to try to support it near that average. Here’s an updated chart:
Financials have led the way down and they’re now threatening to break the 2008 low:
The Nasdaq gave up its 50-day moving average and confirmed a double-top today.
I’ve pointed out the same potential support areas for the S&P 500 that I mentioned over the weekend. But like one of my favorite trading rules states “bear markets have no supports” and I’d be more focused on finding resistance in order to short it whenever it bounces.
The Russell’s getting dragged down by the rest of the market.
The Dow continues to head toward a retest of the 2008 lows.
Once again everything’s down
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Down | Down | Down(-) |
| Intermediate | Down(-) | Down | Down(-) |
| Short-term | Down | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
For the Dow, the other interesting thing to watch is whether we finally get confirmation of a false break-out from the former all-time highs. We first broke to the upside to new all-time highs in 2006. It served as approximate support twice this year.
Not that I care about the Dow of course…
Good point about the old all-time high on the Dow. It’s also interesting that the S&P peaked last year at its old all-time high from back in 2000. This will be the decade of chop.
Great charts Mike. Always fun watching significant drops when you are in 100% cash. Still hard to believe how fast this all came on. Good luck to all the longs.
Mike:
thanks for the charts and analysis. if you get chance, check out my post on the bottom fishing strategy amid the current market conditions.
regards,
fw
Adding to the Transports woes was the diamond top.
As an aside, I know you are not a big fan of the Dow – but to see it struggle so far below its 50-day MA can’t be good news for the other indices.
The tough love in the semiconductors which finished at the February reaction high (support) probably means test of 1,864 for the Nasdaq 100 – although the Nasdaq has already violated February high support.
Best wishes,
Declan
Mike,
I was in 100% agreement with your charts, but the market is decisively higher this morning. Is it a good fade setup?
What do you think?
-Anthony