Well, That Sucked

Well, I'm sure impressed with how generous yesterday's bulls were today, giving back nearly their entire gain. Bernanke was widely given credit for yesterday's rally (which came well after yesterday's announcement), but I haven't heard anyone (except the usual assortment of bears) giving him credit for today's drop. On the bright side, volume was lower today, but still quite high. The bad news is that yesterday's MACD histogram, which went less negative than the day before, was negated by today's even lower histogram. That is an indicator I had paid no attention to until i started looking at the Elder impulse chart, and it usually does a pretty good job of predicting a trend change, but gave a false alarm this time. However, we did not undercut yesterday's low, which give us the chance to rally here, but if we do undercut it, it's lights out.

 

The Nasdaq showed a little relative strength today, but not much. The MACD histogram undercut yesterday's, but not Monday's. Technically I have no idea if that means anything, but it might be a sign the market is settling down here. At some point we should get a relief rally (at least on that lasts longer than 45 minutes), followed by another leg down which will be the real test. Of course, there isn't a whole lot stopping it from going down more here first.

We see the same thing on the MACD histogram on the Russell 2000. Again, it might not mean a whole lot, and I'm sure not trading on it, but I will be keeping an eye on this. It is pretty rare for the MACD histogram, once it peaks out )either positive or negative) to hit another peak later.

Ticker	Relative Strength Index (14)
XLK	32.27
XLU	31.97
XLP	29.28
XLB	28.96
XLF	27.64
XLV	25
XLE	21.88
XLY	20.26
XLI	16.66

Here are this week's sector ranking by RSI

I was surprised with XLK leading this week, but looking at the chart I shouldn't be. It got a humongous bounce yesterday which almost brought it back up to the June low. It did have a nasty drop today, but not nasty enough to knock it out of first place.

XLI has taken a horrible beating since this all began, and I;m not sure why. This is the sector that Donald Luskin, my favorite TV idiot, recommended we buy "with both hands" about two weeks ago. Nice call.

Today was not pretty, but it was not a disaster either. Some parts of the market are showing signs of settling down, but other, especially banks, are still in freefall. If we get a gpa down and a reversal tomorrow, I might contemplate some buys, but I can't think of any other circumstances which will make me do anything but sit on my hands. Tomorrow can just as easily be a disaster, and I don't intend to stand in the way. 

I will have the new highs update shortly.