U.S. stocks dropped to a three-month low, completing their worst week since January 2003, after a decline in consumer confidence magnified the risk profit growth will be wiped out by a recession.
Let's go to the charts in the following order: SPY, QQQQ, IWN
These charts highlight four points.
1.) Tuesday was the big day of losses with a sudden drop at the open and continued weakness throughout the day.
2.) Friday we drifted downward and closed on a low-point.
3.) The overall trend for the week is down.
4.) You can literally draw a line from the upper left to the lower right of each chart and have the line represent the week's trend.
Let's go the the daily charts, courtesy of stockcharts.
Here's the SPY:
1.) There is a big jump in volume above the preceding 3-4 months. This indicates sellers were looking to get out.
2.) The index closed below the 50-day SMA.
3.) The index clearly broke the 6-month uptrend and broke through previous support levels.
Here's a chart for the QQQQs
1.) There are 4 days of heavy selling on between 2-3 times the normal volume for the preceding 3-4 months.
2.) The index closed below the 50 day SMA.
3.) The QQQQs have traded in a range between (roughly) 42.50 and 45.50 for the last three months. We closed below that range on Friday.
Here's a chart for the IWNs
1.) We had the heaviest selling of the indexes here -- up to 5 times the norm for the last 3-4 months.
2.) The index closed below the 50-day SMA.
3.) The index broke through two uptrends -- one that started at the beginning of October and one that started at the end of January.
All of these indexes had long red bars with large volume. This means sellers are in control and looking to book profits.
I'll be updating this information as the weekend progresses.
