The stock indexes fell sharply today. After the indexes opened the day session with a gap down, most indexes drifted slightly lower while waiting for the FOMC minutes, then couldn’t decide whether to rally or continue dropping. It was decided in the final 45 minutes when the indexes pushed to new lows for the day and closed near the bottom of the range. The move was probably exaggerated by the lack of volume due to the pre-holiday mood. The week before Labor Day is often one of the slowest weeks of the year.
I’m including the QQQQ chart today. This time I have the very short term momentum indicator that I use to determine momentum on the Trends page. If you saw the summary for yesterday (8/27) it had most indexes and sectors turning down as of the close. You can see a red dot on the indicator zero line yesterday, indicating the momentum direction change. There is often good follow through when these momentum direction changes occur in the direction of one or both trends. In this case the longer-term trend was rolling over to the downside. When the momentum changes occur against the trend I prefer to see a divergence in the double stochastic. Yesterday I included a chart of the S&P Financial ETF, which today was down about one percent more than the broader indexes, and down more than the other sector spiders, and the momentum direction change occurred three bars earlier.
The first area of support for the QQQQ was the low of today at about 46.71, which is the first fibonacci retracement level. The 50% level comes in about 46.27, and the next lower fib level is 45.81. I don’t put much emphasis on fib levels, but many people watch them, so they often become self-fulfilling. The lower short-term error band is about 46.05 at the moment.
Gold is still in sideways pattern, with short-term momentum turning down today, with trends sideways to slightly down.