Today on financial media, FixX(Twitter), and all over the blogosphere the efforts to guess the bottom were so silly, in fact, it could be possibly called extreme.
I’m not going to single out individuals, reporters, or some of the inane commentary offered today other than to warn everyone that selecting the sources for one’s market and portfolio’s future requires strict discipline and analysis now.
With that out of the way, let me reiterate, this was not the big one, not capitulation, and not a crash. Selling was orderly, right up to the close even. No major dislocations, not too many indications of brokerage or banking stress exhibited, and still a certain percentage of retail bagholders insisting that this could well be the greatest buying opportunity in years.
This is what happened on the S&P 500 today overlaid into a 1 year chart:
- Nothing good happens below the 200 day moving average.
- Nothing good when a prior rally attempt gets smoked
- A bearish pattern is now in charge and barring a miracle, will continue for months to come.
This isn’t hard folks.
The Fed isn’t coming to save anyone yet as financial stress is not that severe. The Trump administration believes they are 100% in the right and will not relent until things start to break. And retaliation from the largest, most meaningful powers will not occur until Sunday night so as to have maximum impact.
The internals today were meh to below average at best, nothing great, nothing disastrous from the NASDAQ and NYSE(combined):
New Lows: 1401
New Highs: 105
NASDAQ: 9.6 billion total shares traded, 2.8 up, 6.8 down. 758 advancing issues, 3778 decliners.
NYSE: 7.2 billion total shares traded, 869 million up, 6.8 billion down. 362 advance, 2956 decliners.
In other words, boring as hell.
For a true capitulation event, this old salt believes that we must see over 20 billion shares traded on the NASDAQ with a 10:1 in shares and advance, decline over the norm. By that notion, the NYSE would need over 12 billion shares total, also a 10:1 A/D line, and a blow up on the Advance/Dwecline line of over 10:1 and the internal shares available for anyone to trade.
So buckle up. Watch currencies and credit. As that destabilizes further that should provide greater clues to the retaliation against the US.
For now, just enjoy the show.
[…] The S&P 500 this week demonstrated that the smart money knows how to liquidate orderly and escape before the sheep realize that they are broke. This was not panic selling although NYSE internals were of a capitulation nature, the NASDAQ nor total trading volume confirms this was the so-called “big one” as written in these pages on Thursday. […]