While the market did rebound after Friday’s heavy sell off, the volume was not strong and it simply offered day traders a chance to work off some short term oversold readings. Recalling last week, Friday’s price action was significant for the following reasons: volume was massive, the indices all closed below their 10 day moving averages, and the S&P 500 made higher highs then reversed to the downside.
This price action from the S&P 500 last Friday was huge historical. Jason from sentimentrader reported that since 1928 there have only been 8 instances where the S&P 500 broke to fresh 52 week highs then reversed and closed below its 10 day moving average. Let’s look at what happened afterwards:
View Table EnlargedThese results are not too reassuring, and overall this makes last Friday the session to refer to moving forward. Until the Friday intra-day highs for the S&P, NASDAQ, and Russell ( 1302.67, 2755.28, 796.04, respectively) are eclipsed, this market will be very risky to go long in.
For me personally I started moving back into 100% cash over the last two weeks and was 100% cash by the end of last week. Stocks like Ezchip EZCH left me with nice profits overall and until the market re-proves its strength a heavy cash position is not a bad idea.
Charts below and keep it frosty out there.
All three indices now trading below their 10 day MAs.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Up | Up | Up |
| 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.
Very goo d initial post Blain, doing a good Mike and then some. This is just what the we need for content. Thanks.
oh mike, I’m gonna miss you.
good stuff…
It’s good to have the site back up and running….Best wishes to you Mike and to your new endeavors. You will be missed.
1130 Target if we can get below 1283 and stay there (Weekly chart).
Thank you for the comments and warm welcome!
Pre-market action shows BIDU up big as the stock beat earnings which has helped the indices climb for what should be a strong open to the upside. Let’s see what happens.
well it took 2 days this time