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Thursday, October 11, 2007

What Happened?

We were safely rallying today on yet another crappy economic report, when all of a sudden, the bottom fell out. What happened? The SP500 close right at support, but volume was very high. Distribution day #2.


The Nasdaq took the biggest hit, with the highest volume since the August panic. It was a bit overbought, so we were due for a pukkback, but this was a nasty reversal. Distribution day #2 (IBD dropped one from the Nasdaq this morning).

Oil hit 83.67 today, but that was a good 3 hours before the market collapsed., so I don't think we can blame that.
(Chart from Nymex.com)
JP Morgan downgraded it's estimate on BIDU's 3rd quarter earnings. This started a huge drop starting at 1 pm. The market as a whole didn't start dropping until just before 2 pm. This was very likely what got the ball rolling.

Google was up big in the aftermarket yesterday, again today in premarket, and looking to make another big gain today. Why? Cramer. When enough of the Cramerites got in, the rug was pulled out from under them. I suspect this was the primary cause of today's collapse.

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