Thursday, August 5, 2010
Volume has Fallen off a Cliff; Waiting for Jobs Number Friday
Volume continues to fall off a cliff as today's NYSE volume was well under 900 million shares. The market should give way soon to a sharp drop to at least the 1100 level in the S&P, but possibly much lower. It seems that folks are waiting for the big jobs number coming out tomorrow. So after the number is released, the market's volume should return a little bit and get this market moving in line with the larger trend. I feel that the rally over the past few weeks is at its ending stages and will roll over at any time. A sharp rally based on the jobs number tomorrow would be a great opportunity to get short as long as all the other indices listed below remain below their June highs. The flat sideways action the past couple days suggests this is a 4th wave we're in and so a final sharp 5th wave rally before reversing violently may be in order. It doesn't have to shoot higher, and the S&P futures chart below is evidence of that. But tomorrow's jobs number has good prospects of giving us solid ground action to help us going forward.
The S&P futures made a nice 5 wave decline and a correction that is about at the maximum comfort level for a retracement at the 78% fibonacci level. So as long as the overnight high here remains in place, it's possible a top is already in and major selling is on the horizon.
Again, the various indices are quite fractured, with the Russell 2000 and Nasdaq Composite now lagging drastically compared to the Dow. Although the market hasn't tanked hard yet after such a pronounced divergence between indices, the fact that they've remained divergent for so long is still quite bearish in my view.
I remain bearish in the short term as I aggressively look for a top and reversal that should take the S&P down to at least the 1100 level in a hurry.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.