I only saw 2 problems with this most recent market action… the first was the volume to the downside. It had been high, but there was never a one-day capitulation sell-off. That’s not necessary, but it is always a tremendous help in positively identifying the bottom.
Before I mention the second matter, I attended a monthly investors’ meeting last nite, and made one comment early on, as we were discussing the day’s turn and positive results. I had said that it was necessary to see if we are taking a lead, and the other markets around the world pick it up, and this becomes a world-wide relief rally. Looking at what has transpired overseas overnight, I see only red in Japan, Hong Kong, England and Germany. Our bounce did not spark a world-wide relief rally.
That leads me to my second concern: It’s about the volume again. Besides no capitulation sell-off, yesterday’s volume was not particularly high, as to be considered exceptional, and the confirmation that the market did, indeed, reverse course, and the next rally had commenced. During a reversal, monster volume is a very positive confirmation, and it just wasn’t there yesterday.
Our futures, trading overseas, on the Dow, 500, and Nasdaq indexes are… off, and not by a small amount either. As of 6:46 a.m. EST, they are down by 1.5%. Unchanged, this would mean our open will be rather ugly, and will give the larger part of yesterday’s gains right back at the open.
All told, however, we may get poorer sentiment, perhaps a nice sharp spike in the VIX, and a better ‘low-risk market entry opportunity’ here soon. The lows of August and September really need to hold… and the bottom of October of ’14 is the very last resort.
Sadly, as of 8:18 a.m. EST, the futures are off more, now down by almost 2%! Let’s see what becomes of the August/September lows, as they are now in sight!
Wow! 8:45 a.m. EST, and… Fugettaboutit!!! Futures are down by nearly all of yesterday’s gain… more than 2% across the board! This will be a very interesting day, to put it mildly.
It is 9:24 a.m. EST, and I’m looking at my own holdings, those that are trading in the pre-market… this is not a pretty sight! But, it may be just the final washout needed to finally clear the decks, and reset for the lift-off that is always born 0f this kind of action. The technicals say so, for sure!
It’s noon EST and I am just in awe! Off 2 1/2 and 3% WOW! Need to look at charts and see where this is at in relation to final ‘support’ levels. I’m trusting there still might be some!!!
Here’s to your successful investing!
Harold F Crowell