CSCO Drops the Big One

On a day when the market got about the worst news i could get (CSCO declining revenue and further declines expected), it did a pretty decent job of holding up. A long, sow rally looked like it had an outside chance of breaking even before another big one (DIS) reported early and sent it down again. Still, it is doing a good jobe of getting back above support, but that support has proven to be a bit vulnerable. The SPX is still well abive the 20dema, so even further dropping from here is not only possible, but might actually be positive, as it works off the overbought-ness of last week's absurd rally.

Amazingly, CSCO did not weight that heavily on the Nasdaq 100 after the open.  CSCO never bounced back, but the other big cap techs didm and INTC even finished in the green. The gap from last week is bow filled, and it does look like it is strong support.

The Russell 2000 has been holding up extremely well during the recent market weakness, and right now is probably stronger in the short term than any of the others. I will be looking for a blast off here is the market turns up again.

Among the indicators I look at periodically, the number of new highs has been pretty goo for judging the health of the market. There seems to be a level here where you can determine if the stance of the market is bullish of bearish, but the problem here is we are dealing with total numbers rather than percentages, such as on the percentage of stocks over the 50dma, a very reliable indicator. There has been more deterioration here than there, and we are in the transition zone, which tells me it is time to tighten stops or even take some profits.

This is the new highs on the NYSE, which include ETFs, so it may be harder to judge, but it does indicate that teh NYSE was the first and fastest out of the box in August, but has slowed down significantly in the past 2 months. This is also right in the middle of the transistion zone, and if it keeps going down, I will let the stops do the work for me.

I will have the new highs shortly.