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Thursday, November 7, 2013

I Told You So

The excuses are flying all over the mainstream media, mainly that GDP came in so good today (2.8% vs the expected 1.5%), that the market is selling off on taper fears. Those of us who have been watching this market closely call BS on all that: this market has been warning us of this for a few weeks now. All support was crushed today, and it is likely we won't stop until we get to the P pivot point/ 50dma, if we stop there. The market was broadly crushed; there were really no pockets of strength to hide in.

The Nasdaq, especially, has been warning us for about a month, when it stopped leading. The Nasdaq 100 seemed to be holding up fairly well, but came flying down when support was kicked out from under it.

 The Russell 2000 has been in a correction for over a week now, and this was the canary that fell first. The fact that it could muster a decent bounce early this week should have told us this was going to happen.

Last week the percentage of stocks on the NYSE above the 50dma was about to do the bearish cross of 75 from above. It has nbow done it, the best confirmation of a correction that I know of. This may get a few bounces, but is unlikely to get a real reversal until it is well below 55, and amy have to go all the way to 35 or beyond before it reversed. This is normal operation here, and it is overdue.

The same indicator on the Nasdaq, once again lagging and giving even better confirmation  of a correction. The same thing I said about the NYSE goes here, just change the numbers to 50 and 30.

I hate to say I told you so, but, well, I told you so. This correction has been telegraphed for about a month: one problem we have had for the last year (or last 5 years, really) is the interference from the Fed, and this year they have intervened to stop every potential correction in it's tracks. We might have expected it this time, but at some point, it isn't going to work anymore.

I will have the new highs update shortly.

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