Thursday, November 1, 2007

Today's Markets Pt. II

One of the funny things about traveling is you realize that there are certain things you just can't live without. I use QuoteTracker as my market following program and for charting etc... I literally can't live without it anymore.

Anyway, let's look at today's charts from a program that I know how to use.

The SPY's gapped down at the opening and then traded in a range until about 2 PM. This is when the SPYs ran into upside resistance from the 50 day SMA. At this point volume picked up and traders literally ran for the doors.

On the 5-day chart we have a complete technical breakdown. The SPYs were holding to a consolidation pattern above about 153 as they waited for the Fed. That broke down right at the opening with the markets falling further as trading went on.

This chart should cause some concern. The good news is we are still above the 200 day SMA. The bad news is...

1.) Today the SPYs fell through 3 SMAs -- the 10, 20 and 50. That means there are three SMAs that will now provide upside resistance to a rally. That's not good.

2.) The upswing that started on 10/22 is now gone. From a long-term perspective, we could be seeing the market move into a period of lower highs and lower lows. In other words a correction (at least) and a bear market (at worst). However, the bear market is a long way off at this point. I'm simply thinking out loud on what the downtrend that started on 10/8 could be starting to look like.

The QQQQs on the other hand, are still in good shape.

1.) The shorter SMAs are higher than the SMAs

2.) Closing prices are still above all the SMAs.

3.) All the SMAs are still headed higher. There may be some trouble brewing with the 10 day SMA, but we'll need a few more days of data for that.

As I mentioned below, the biggest change today is that bad news is now bad news and not fodder for "the Fed will cut rates again." That means the floor the thought of a Fed easing is now gone from traders thinking. That means we could have some seriously rocky times ahead.