Comment: The falls last night were more muted than the previous session, with the Industrials having the best of it, and the Nasdaq100 the worst of it. Volume remains high.
NewHighs/NewLows 106/22. NH>NL. The ratio of NH/(NH+NL) is at 82.8%. In the Do Not Sell Zone. Those are the worst reading since late August, early September; but still no great concern for alarm.
Technical Comment on the SP500:
The Dow finished at 1433.2. Support/resistance: 1418/1466 MACD Histogram. Below zero. Negative. MACD. Below zero. Negative. RSI.9 is at 41.3. Negative. Stochastic. 46.3. Broken below 80. Negative. CCI.14: -88.6. Below zero. Negative.
The medium term trend is up. The short term trend is down. The chart has now had four days down and at minor short term support of 1433. Major support lies at 1418, then around 1400. If the bulls are to stage a counter-attack, around here looks a likely spot.
Volume has been high high, peaking on the 14 September which was also the top on the SP500 chart. (The highest volume bar is actually last Friday – but that was the quarterly quadruple witching OpEx Day when volume is always very high. Arbitrageurs and market makers are balancing out their options by buying and selling at that time. The volume on that day can be discounted as a guide to market action.)
The high volumes continue to suggest that smart money is selling – and late comers, hoping for further rises, are buying. The 14 September congruence of market top and highest volume is particularly instructive.
The market never goes in a straight line. Six days down is rare. We’ve had four. Stochastic is mid-range, RSI close to 40. Those are regions on the indicators where positive sentiment can reassert itself in a bull market. We might get a pause here and maybe some upward movement, but I think the selling pressure will reassert itself in the near future.
To my eye, the Congestion Zone lying just between 1400/1420 looks a good bet at this stage. If a bigger pull back occurs then major support might occur at the 189-EMA and major horizontal support marked with the solid horizontal line on the chart. That also more or less coincides with a major long term up trend line.
In other action, Base Metals ETF was down -1.21% and the Ozzie Dollar was down -0.44%. U.S.$ Gold was down -0.56% and U.S. Oil was down -1.21%. DAX (Germany) was down -2% and the chart formed a small double top. I can’t see anything in those figures to give relief to our market today. But – you never know – bulls might try to reassert themselves after an initial fall, just like they did yesterday.
(20min delay)