The “rally” on Monday was impressive at times with the Nasdaq and Nasdaq 100 both posting impressive gains. There is a “but” however to yesterday’s action.
The “but” was the butts the market showed to everyone:
-Meh volume on both the NYSE and Nasdaq indicating that not everyone thought this was a true relief rally.
-Market internals indicated a lot of selling and distribution under the surface with the advance/decline volumes plus numbers on the Nasdaq, 1994 advancing vs. 2683 declining, plus worse on the NYSE telling the tale that smart money was selling to dumb money.
-New highs vs. new lows on both the NYSE and Nasdaq were again dreadful.
-Lastly, precious metals and commodities did not move enough to prove that the happy happy China Virus variant stories were relevant in the least.
Thus leading to this morning’s action:
So instead of the usual market manipulation and window dressing to mask the weakness in the markets, there is a good probability that today could, I stress “could” as there are no guarantees, be another bloodbath on Wall Street. The key area to watch on the S&P 500 will be around the 4580 area as a violation of that area with sustained selling could trigger a technical wave of automated liquidations putting 4531 (50 DMA) into play.
The “excuse” for all the red?
Here’s your sign:
And that’s all it took to trigger the selling in Europe and US futures. Buckle up, we could be going downtown hard today.