It was difficult to find any up markets in the trading session today. Commodities got hammered across the board today. Stock indexes started the day week and extended down late in the day. Some guy on TV keeps saying that there is always a bull market somewhere, and the only place I could find one today was the ZSE, or Zimbabwe Stock Exchange Industrial Index. There is not a chart to be found, but it was making headlines today when this indexes posted back to back two hundred plus per cent gains. But before dumping US stocks and buying into Zimbabwe, keep in mind that the rise is really just people trying to get out of a rapidly depreciating currency and into stocks, with the idea that stock might offer a hedge to the currency.
The stock indexes tried to bounce a bit in previous sessions, and the rally was accompanied by diminishing volume. Yesterday the indexes turned back down, right up against the faster moving average, and on slightly increasing volume. Today it looked like the downtrend is trying to resume. Volume picked up as prices moved sharply lower, and momentum has turned back down from a short term overbought area. On the other side of the coin is that this is the third try to probe back into the tails left on the candles on the 10th and the 16th. Both those dates showed a fair amount of price rejection at the lows in both the S&P and the Nasdaq. The lows today were again rejected, so far, and that leaves three tails. With trend and momentum both down, these tails could easily be overtaken if another wave of selling comes in over the next day or so. If the lows can somehow hold, perhaps more of a two sided marked would develop. Sentiment seems too negative to be piling on the short side here. But with the trend down as hard as it is, it is too dangerous to try bottom picking. I’ll post a chart when this resolves one way or the other.