The above chart, courtesy of
Marketwatch, illustrates all of the major market phenomena at play last week. For a complete run down of the last week's historic market events
click here.
Despite last week's capitulation, the underlying credit crisis remains and will take years correct. With that in mind, I suspect that near term, we'll rally back up to the trend line, but pressure will come back in when the shorting ban is lifted.
A close examination of the
COMPQ tells us that bearish momentum is reversing as depicted by price/volume and the
ADX. However, the gap up stalled at the 50
DMA and a quick fade ensued. The black candle signals that we opened higher than we closed, but we still have an unfilled gap
EOD as highlighted in green. I'd like to see that gap filled sooner than later.
The
SEC's sudden ban on shorts in financials imposed a monstrous move in the
cboe put/call ratio.
The McClellan oscillator also made a gigantic move from extreme oversold back to neutral in the space of two days.
The
VIX carved out back to back
WRBs, first a shooting star, and next a hanging man (to be confirmed). The ban on shorts will remove some liquidity from the markets and will likely result in a decrease in volatility short-term.
Ban on Short Selling - The Saga ContinuesThe ban on short selling financials is going global. Canada and Germany jumped in late Friday and now Australia has taken it one step beyond, by banning the shorting of all stocks on its exchange. Taiwan will ban short selling of 150 of the index's heavyweights when they trade below the previous session's closing levels for two weeks starting Monday. The
FSA in the UK is being urged to extend its ban to other volatile sectors. And in the US, major companies with large financial services businesses, such as GE and American Express are begging to be added to list of 799 companies. The French will monitor shorting activity closely, but have yet to announce a ban.
I fear that the ban will be extended beyond the 2 week range and that day-trading will become increasingly constrained.
The MACD has yet to confirm the bullish pennant BO, so the pattern is suspect.
Energy is forming a symmetrical triangle, but it's not clear which direction it will break. Either way, the coiling of the ADX +- lines foreshadows a big move.
Gold has held up quite well given the strength of the dollar.
The above chart, courtesy of Marketwatch, illustrates all of the major market phenomena at play last week. For a complete run down of the last week's historic market events click here.
Despite last week's capitulation, the underlying credit crisis remains and will take years correct. With that in mind, I suspect that near term, we'll rally back up to the trend line, but pressure will come back in when the shorting ban is lifted.
A close examination of the COMPQ tells us that bearish momentum is reversing as depicted by price/volume and the ADX. However, the gap up stalled at the 50 DMA and a quick fade ensued. The black candle signals that we opened higher than we closed, but we still have an unfilled gap EOD as highlighted in green. I'd like to see that gap filled sooner than later.
The SEC's sudden ban on shorts in financials imposed a monstrous move in the cboe put/call ratio.
The McClellan oscillator also made a gigantic move from extreme oversold back to neutral in the space of two days.
The VIX carved out back to back WRBs, first a shooting star, and next a hanging man (to be confirmed). The ban on shorts will remove some liquidity from the markets and will likely result in a decrease in volatility short-term.
