Wednesday, October 15, 2008

Today's Markets

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We're going to use several charts today. First -- here's the big headline grabbing chart. The market fell out of bed today with the SPYs dropping 9.61%. Also note the heavy selling at the end of trading. Traders clearly did not want to own anything going into tomorrow.

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On the 10 day chart, notice that last week we lost a ton. The market dropped from 114 to 84, or a loss of 26%. But note that we're still within the wide range established over the last two weeks.

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Most importantly, remember that a I mentioned the market appears to be in a wide trading range/consolidation period. Note the four days ago we had a huge volume sell-off. This may have been a selling climax. Also note the market is extremely oversold right now by most technical indicators. Here's a chart of the RSI, MACD, Chaiken money Flow, Williams Percentage Number and Accumulation/Distribution for the current price level:

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But we're also in a period of high volatility.

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Until I see the market drop below roughly 84 I still think we're consolidating. There's been a great deal of fundamental action to stabilize the financial sector. Most traders know the economy is in a recession and have traded the market accordingly -- we're already at 2003 levels.