Per the gauges I use, markets have now hit extreme oversold levels for the 13th time since the May 2nd highs.
$NYUPV: 49, when < 80 is sufficient
$NYUD:$NYUPV: -22.47, when <-12 is sufficient
$NYAD, the daily: -2152, when -2000 is sufficient
$NYUD: -1108. I like to see this drop to -1300 or so, but over the past couple of months, when all the other gauges have hit extreme oversold levels, this has only gone into that range twice, on 8/4 and 8/8 .
$NYMO: $NYMO is now 15pts above its lower Bollinger Band and will probably tag or pierce that BB regardless of what the market does tomorrow and so will go into oversold mode.
$TRIN: 3.51, showing that the selling is perhaps a little overdone, at least in the short term.
P/C Ratio: 1.29. Previous extreme oversold days have pushed this up into the 1.3’s and 1.4’s so this could have gone a bit higher and may yet.
Zweig Breadth Thrust: 41.48, when 40 is generally the line in the sand.
4 week New High/Low Ratio: 17.43, when 30 is oversold and 15 is extremely oversold.
$SPXA50R: 25.60, when 25 is the line in the sand.
90% day: 96% of volume went into declining issues today. This kind of disparity used to be quite rare but there have been 8 days like this, +/- a % or two, since the May highs.
But wait. There’s more.
$TRAN was down 5.27% today on 50% higher volume. Some of the stocks in this important index were down as much as 9%. $BPTRAN dropped by 20pts from 60% to 40%. This is the second biggest drop for $BPTRAN over the past two months. The previous drop took $BPTRAN down 25pts on 8/8.
This is not a good situation for longs. Tech is great, wonderful, but the market cannot rally on AAPL alone. Prior to today’s sell off, $NYSE had been dragging its feet, and the $RUT was being pulled along rather than leading, as it should in a healthy market. And the transports were being pumped to the moon, which is what THEY often do just before they sell the transports hard.
The weekly chart of the $SPX is trashed. All the positives from last week have evaporated.
$VIX closed back above its 20MA and the upper trend line on the falling wedge pattern from yesterday’s chart is now at about 40, and falling. It is now very possible that the $VIX will break out of the falling wedge long before it reaches the apex of the pattern, as in tomorrow or Friday, if you catch my drift.
The market is extremely oversold and so should bounce starting sometime during tomorrow’s session, but as has happened to every bounce so far since the May highs, the bounce will most likely get sold into.
I have been waffling back and forth about this market thinking that the time is right for a bottom and let’s get on with it, but in the back of my mind I can’t stop thinking about 2008. If the transports don’t reverse before putting in a new swing low, then I have to think that the risks of a 2008-like decline become more probable.
Only the paranoid survive, baby.
Be careful, and GL