Capitulation? Tuesday Evening Report. 9 February, 2016.
Today looked like Capitulation Day especially in the Financials, which dominate our market.
Here's the XJO Chart for today:
Today was the worst down day since we saw the ugly days in August/September 2015. Today was down -2.88%, but back in August, 2015 we saw a down day >4%.
But - lets face it - today was the worst day down in six months.
A "capitulation day"? Probably.
Volume was very high at 127% of the 20-Day Average (which has been rising).
AdvancingVolume/DecliningVolume Ratio was 21.5%. Usually a figure under 20% is required for a capitualtion day, but today was close.
Near enough?
Unchanged Issues today was at 291 - under the magical 300 level I've set for a capitulation day. Not that far below 300 - but it does meet the criterion.
Indicators are generally showing positive divergences, so the possibility of a move up in the near future is good.
Let's have a look at the XXJ Chart (Financials X-Property).
Today was down -4.44%. That's the worst result since late August when the XXJ was down -4.92%.
Here's the National Australia Bank (the worst performer in the four big banks):
Today it was down -4.78%, a little worse than the late August 2015 result of -4.65%.
We never know for sure if we've seen a capitulation day until sometime in the future, but this is looking like a good candidate.
Capitulation days don't guarantee a change in the long term trend, but a change in the medium term trend is a likely probability.
RB
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