Are My Charts Upside Down Or Is It The Largest One Day Decline Since Early July?
When I first saw the 1.27% decline in the Standard & Poors 500 index I took a double-take. Could this be correct? I asked myself. The data is obviously wrong or maybe my charts are upside down. I was under the impression that out sized percentage drops were legislated out of existence. Apparently not.
Enough with the hyperbole and on to some observations:
Bears Clawback “Less Bad” Gains As SPX “Resets”
The SPX marked it’s largest one day percentage decline since July 7th, 2009 when it fell 1.97%.
- It was the first 1% or greater decline for the index over the course of the previous twenty-four trading days. I have this as the longest string of days without a 1% or greater decline since October of 2007, the month the bull market ended and the bear market began.
- The index closed below the daily high two days ago, a measure of trend, for the first time in 23 days. Ending a streak that is the longest since January 2004, the month the recovery rally out of the 2000-2002 bear market began to top before entering a two quarter sideways consolidation.
- For the first time in 23 consecutive days the market closed beneath the previous day’s low. The streak is the longest since a 24 day one that ended in February of 2006.
- Today the SPX closed beneath the five day exponential moving average, a measure of momentum, for the first time in 21 days. The longest such streak since 1998, and only tenth time the SPX has traded above the 5dEMA for 20 or more consecutive days over the past 25 years.
I could go on and on but will stop here. Anyhow, these are some of the “counts” that I watch. Over the course of the last month I watched these counts stair-step toward levels that simply do not print very frequently. The point of all of this is to highlight how fierce the rally since early July has been. Rallies such as the one off the July lows do not occur very often.
Today is what I call a “reset day”. I haven’t structured any trading play around reset days as sometimes they can mark the end of a trend while other times they simply are days were the anomalies built up over the extent of the rally are reset. Looking at some of the incredible moves of individual stocks — doubles, triples, etc — over the last month makes me wonder, were the “new bull market” to end today, whether we will look back at this period and define it as the blowoff phase in a new bull marker within the context of a new financial and economic reality. Who knows, but it would seem to fit the definition.
Nasdaq, NDX Still Engulfed By Selling But Sell Off Could Be “More Worse”
Ever since the technology heavy indices printed a bearish engulfing reversal candlestick the markets have been in a bit of a funk. Nasdaq has traded lower four of the last five days however the choppiness of the decline has contained the price damage as it is only off a little over two percent from the local high.
Annnnd the chart of the day is…
Perfect World Begets Perfect Trend
Chinese-based Perfect World is capitalizing on the tremendous demand for “massively multiplayer online role playing games” in the Cayman Islands. As a result the stock up 300% with virtually no downside “dents” in the trend.
Perfect World Co., Ltd., through its subsidiaries, engages in the research, development, operation, and licensing of online games in the People?s Republic of China, the United States, and the Cayman Islands.
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