Searching for a Bottom
- Posted by Robert Sinn
- on August 2nd, 2011
At 2:50pm I pointed out that the selling over the past 5-6 days had been fairly orderly and that there was “No capitulation yet that I can see – of course that can all change in the final hour of trading…..”. In my opinion that did change over the final hour ( and into the extended hours of trading) of trading. There is no question that there has been serious technical damage inflicted across markets, however, the rubber band has now been stretched very far.
I don’t want to overload you with charts but I believe it is important to go through all of the charts below as it helps to paint the picture of what transpired across markets today. Moreover, it helps to put the current situation into perspective – without further ado here we go:
The $SPY posted its highest volume day since the March 16th Japan panic low (125.28 low on March 16th), which coincidentally was just below where we ended today.
The area in the rectangle is the capitulation that I was referring to – heavy volume selling in the final 20 minutes which screams “GET ME OUT!”
$EURCHF continues to flash red warning lights as it continues to plumb to new depths (all-time lows) each day.
The McClellan oscillator is now below its November 2010 and March 2011 low levels, both of which preceded large rallies.
Treasury bonds ($TLT) continue to soar as TLT has now popped above its upper Bollinger Band. Investors appear to be knocking each other over in an effort to lend a nearly defaulted Uncle Sam 10-year money at 2.62% and 30-year money at 3.92%. Once again this spells FEAR.
$SPX busted below its lower Bollinger Band with today’s large bearish marubozu candle. Everyone knows the S&P broke the neckline of the head & shoulders topping formation today, SPX also closed below its 200-day SMA & its weekly uptrend line drawn from the March 2009 bottom. Oh and by the way, today was the seventh consecutive lower close for the S&P and the eighth for the Dow. Now tell me something I don’t know?
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Robert Sinn is a professional trader and market analyst who focuses on multiple asset classes including equities, futures, options and currencies. He integrates fundamental and technical analysis. More »