Based upon a majority of the gauges I use, the market went into extreme oversold mode on Friday, marking the 16th time this has happened since the May 2nd highs. The simplified version is that volume into declining issues made up 96% of Friday’s total volume, $NYUPV closed at 79.21, and $NYUD:$NYUPV dropped to -14.64. I use several other gauges but because the market is flip-flopping so erratically many of these gauges don’t have the necessary time needed to drop for several days and then finally hit a climax number.
For instance, at many bottoms, $NYSI will drop by 70 + digits, but it arrives at that climax level by dropping incrementally day after day and as downside momentum builds, then $NYSI will finally flash a climax number. This past Friday, $NYSI dropped by only 16pts.
$NYSI warns that breadth has little improved over the past several weeks.
There was a time when the market signaled bottoms when things like $NYUPV closed below 80, but not right now. It just seems to me that we’re watching a major distribution phase in the market and that when the Big Boyz have off-loaded as much as they want, then THEY’ll stop the prop job and let the indexes go where they will. Look what THEY’VE done to PCLN, BIDU, QCOM, SBUX, VMW, and other tech darlings in the last few days. Tech investors were certain they were immune to the ails of the rest of the market, but this is never the case. Could be that savvy tech investors were buying into a distribution pump only to get a taste of market reality when the pump turned into dump. And I am probably completely wrong about this but a skittish, paranoid trader doesn’t rule out anything.
While I am watching several key sectors and indexes, like $TRAN, $RUT, $SOX, $CRB, XLI, SLX, XLB, and the German $DAX, I continue to monitor the weekly $SPX chart and the movement of my chosen MA’s. By this past Thursday, the 52MA looked to be turning up slightly on the week, but by the close of trading Friday, the 52MA had dropped slightly. While the drop may seem insignificant, this past weeks drop marks only the second time the 52MA has dropped since October 2009.
Charts courtesy of StockCharts.com
The bullz are now trying to talk up earnings, which they expect to be…much better than expected. Maybe they’re right. Maybe not. When you look at important transport stocks like JBHT, CSX, , NSC, and FDX, you have to wonder if maybe the bullz might be hittin’ the crack pipe. Imean, if people and institutions are dumping FDX, an important bellwether stock , then how does that bode for upcoming earning’s season.
As an old friend of mine used to say, “Paranoia is just a higher form of awareness.”
Stay on your toes.
When the sirens call, don’t answer.
Me, I’m just going to watch from the cheap seats.
GL in the week ahead.