Tuesday, September 9, 2008
Wave 3 of (3) is Underway; Sept. 9, 2008
Today's reversal where the Nasdaq and S&P took back all of yesterday's gains and then some, and the Dow lost almost all of yesterday's gains, gives a strong signal that the big daddy decline is underway. Plus, last week's 350 point down day was accompanied by NYSE breadth that was extremely weak, signaling that the decline was very strong. However, yesterday's breadth was not strong at all, with only about 55% of NYSE volume going to the upside and less than 2 advancers per decliner. That's pretty pathetic for a 300 point rally. Plus, the Nasdaq 100 actually traded down yesterday. Then, today's reversal brought about weak breadth similar to last week's big decline with NYSE's declining volume at 88% and an astounding 7.09 declining stocks for every 1 advancing stock! This tells us the larger trend is down, and that trend is very strong.
On a simpler technical note, today's reversal of yesterday's big gains created a huge bearish engulfing candlestick (see chart above) on the daily chart, which is extremely bearish for the short term (next week or so).
The bottom line, with wave 3 of (3) underway, the market should be relentless in selling pressure over the next few weeks, and the S&P should get into the 900s soon!