Here's the 2-day 5-minute chart. Notice the market started selling off a little after 12.30. Also notice the market continued downward since that time. Once the market broke through support the volume pick-up and the decline continued.
Here's the 8-day chart. Yesterday I commented the market was forming a triangle consolidation formation; we simply didn't know where the market was headed. Now we do -- lower.
Here's the chart that should concern everybody. The SPYs closed below the 200-day SMA in a big way. This is what the beginning of a bear market/serious bull market correction looks like. In short, this chart ways we are heading lower.
3 comments:
Just thought I'd leave a post for you to delete. This is fun!
You don't suppose a few hedge funds got hit with, oh, say, one or two notices of redemptions by mid-afternoon, do you?
The problem right now is that nobody has a strong sense of what the risk level of the market is at the moment. We know for sure that there's been a blood letting because of the subprime mortgage collapse, but nobody really knows what that means yet.
We know that the bonds based on sub-prime mortgages are worth less than how they were previously recorded on the books. What we do not know is how much less. There's a lot of chatter suggesting that they are, effectively, worthless right now because nobody will buy them. In the end though there is a difference between effectively worthless and actually worthless and eventually somebody's going to get fabulously rich(er) off that difference.
In the mean time though, we don't know how far the damage will spread, and so everybody is incredibly skittish. People are waiting for some big hedge fund to go belly up and cause a serious crisis. It will take a number of days of quiet, or better yet, positive news, to convince people that the other shoe isn't dropping (or already did). But I don't see any hint that this is likely to be the case anytime soon.
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