Monday, December 13, 2010

Stocks Sell Off Into The Close

Today was an interesting day in the stock market as sellers took control late in the afternoon. Above is a 3 minute chart of today's action with the small caps on top and the S&P500 in the lower panel. What I found interesting today was that as the S&P made new highs at around 2:50pm, the small caps and the NASDAQ (not shown) did not break high. This was a classic example of non-confirmation  of the indices and as a result the market  subsequently sold off into the close.

Keep in mind the NASDAQ and small caps have been leading the stock market higher over the past 3 months but today we saw the first signs of possibly money leaving this market. Remember, this is a just a 3 minute chart so take it for what it's worth but it is something to keep an eye on as the market has enjoyed a nice rally and a pullback is likely..

Just to be clear, I am a buyer of dips but am scaling out of a portion of my long position here. I think long term this market is going higher but short term I feel a pullback is due.


bob said...

Thanks especially for this post.
I enjoy reading your perspective on the makets. And you have made some really good calls, but how you do it is a mystery. This post was helful because you posted the chart first and your analysis last. So I studied the chart trying to guess what your analyis might be. Good fun and educational.

bob said...

I sure wish I could edit my comment,
I think I meant to say that the two comparative charts of the S&P and NASDAQ are what helped me understand a little better how you use technical analysis.

Anonymous said...

Within the next 3 weeks the market will be down 6%. We as overbought as I can ever recall seeing. No one is hedging and margin is at '07 highs. The market keeps making new highs on deteriorating breadth. Furthermore, the number of stocks above their 50day in the S&P is actually decreasing. Enjoy the Santa Claus rally while you can because this will end badly.

-The Grinch

Anonymous said...

Ya, but the trick is to time the peak.
I tried some short positions in the last couple of days and was stopped out. Ouch!

Anonymous said...

Kevin, any updates?
I'm tempted to short in the last days of the year or first days of new year. I cannot stand the slew of negative contrarian indicators.

Anonymous said...

One more thing, I'm long UNG (off and on trying to zigzag according to the daily chart) since late Oct. UNG is not loser like it used to be for long time, but still lags $natgas slightly.

marc said...

I am long strong and livin the dream...buying more right here...right now...


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