Market Update 21 April 2009
This was a hasty post I made on my forum last night …
I reckon we’re in for a helluva bumpy week on higher volatility as earnings season gets hot and heavy.
And if you look at the TRIN the whole of last week, it would seem that there’s a lot of pent-up selling just waiting to explode. Saw this in late September and late November last year and then we had that blow-out -774 point Marubozu Monday (29 Sep) that led into a massive sell-off the following week and the -678 point 1 December tanker.
As you can see in the TRIN chart below, Monday and Tuesday couldn’t hold its buying sentiment and the following three days were actually more bearish than bullish.
Deja-Vu?
I’ll leave you to your own conclusions. If you must know, I’ve taken off my long positions and I’ll be cutting on JAVA. I’ll take XHB off if I can get a decent price on it today.
One other major factor is that DOW is so constipated between my 8,044 (11yr Hist) and 8,234 D’trend since 1998. Plus its wearing a beautiful Doji after a 6 week uptrend … if it don’t tank this week, it surely will on the 8th (weekly) candle reversal. Either way, its an excuse not to be bullish now.
Oh, one more … that ovary shaped pattern just tells me that DOW is ready to “drop the baby” anytime soon.
And this is what happened after the close 7 hours ago …
And that sets up the DOW for a highly probable correction for this and next week. This year, all but one Monday that had a loss of more than 150 points, went on to finish the week lower; 12 Jan, 20 Jan, 17 Feb, 23 Feb and 2 Mar, all closed their weeks with losses. (The only exception being 30 Mar going into the April Bullrun.)
So now that DOW has lost 289.60 (-3.56%) on a Monday, could this translate into more selling-off?
We’re still more than a week away from the proverbial May sell down and with way more earnings on tap this week, it’s going to be a tough call. The mini M&A Monday yesterday failed to lift investor confidence and the VIX did a 15.44% spike to take back an entire week’s decline in fear.
The other disturbing trend has been the TRIN – as the market made gains last week, the TRIN also rallied – as it spiked to its highest close (2.20) since 30 Mar.
Without much data to influence the market this week, it will all be down to earnings. The trouble with that prospect is that earnings this week is expected to be better-than-expected, which raises the fear that anything less-than-expected could be met with more selling. If a mini M&A session can fail to raise confidence, one fears what worse-than-expected results will produce.
If you enjoyed this post, please consider to visit Pattern Trader Tools, leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Sorry, the comment form is closed at this time.