Thursday, September 18, 2008

Technical Picture - Capitulation

The VIX topped out at 42.16, a level not visited since 2002, before reversing and closing at 33.10. That looks like a top with a reversal stick.

The S&P and COMPQ both capitulated on huge volume spikes. This is the highest ever volume for the NASDAQ(3.95 vs. 2.2 avg.), not sure about the S&P. Markets started to reverse from another morning of selling after the FSA (U.K.'s SEC) announced a ban on short selling of U.K. bank stocks. Another spike occurred in the last hour on news that the U.S. treasury was looking into an RTC type solution - this is the week for financial fixes. New lows outpaced new highs 4:1 on the NASDAQ and a whopping 14:1 on the NYSE (those NYSE numbers feel like washout levels). Solid broad based gains with little in the red except gold/silver.

I'm now reading that the SEC is temporarily banning short selling in the U.S. - This news, if it's real, will be devastating for day traders. Hope it's just for financials ( I can live with that) like in the U.K. and hope that temporary is like a few weeks, not months like the U.K.

Update on SEC's propsed ban of short selling - Sources close to the SEC now say they are considering banning short selling of U.S brokers.

S&P E-mini futures are way up after hours. Tomorrow is OPEX - no economic data.


Anonymous said...

Talk about market manipulation... the short banning is crap! (IMHO)

Jamie said...

Hey Jim,

I hope you're right, if by crap, you mean, not true. If, by crap, you mean that banning short selling is a shitty idea, I agree. The SEC has been out to lunch ever since Cox took over, and it's too late to help LEH and AIG and countless others, so what's the point?

Trader-X said...


A total ban would seriously cut into my profits. I don't think it would ever happen, and if it does I am moving.


Trader-X said...

799 companies banned...I may be moving.


Jamie said...

X, that figure is stunning.

The Bush presidency and its appointees have, for the most part been hopelessly unqualified. This is the cherry on the cake - the government stepping in to control stock prices.