Monday, September 29, 2008

Technical Picture - Market Devastation

The weekly chart shows that today's drubbing reached the 50% Fib. retracement of the 2002 - Oct. 2007 rally.

The selling started on the open and closed on the lows. Despite the large point and percentage losses, the fact that we closed on the lows and the VIX (VXN) closed near their respective highs, would normally foreshadow further selling.

The Dow decreased 7% closing at 10365, the Nasdaq was down 9.1% to finish at 1984, and the S&P was down 8.8% to finish at 1106. Pacing the way lower were financials including Thrifts and Mortgages -30%, Regional Banks -24%, Asset Management -20%, Diversified Banks -18%, Consumer Finance -17%. Today's movement came from higher than avg. volume (NYSE 1.4; Nasdaq 1.3), with decliners outpacing advancers (NYSE 16:1; Nasdaq 6:1), and with new lows outpacing new highs (NYSE 63:1, Nasdaq 41:1).

As I mentioned in the comments of the previous post, the weekend edition of IBD said that the markets were in a confirmed rally. Be careful what you read, this is a global credit crisis and the bailout package when it finally materializes will likely be too little, too late.

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