Online Stock Trading | Stocks take a dive, volume rises significantly across the board

Stocks take a dive, volume rises significantly across the board


Filed Under Market Commentary |

Stocks dove by the end of the day, selling accelerated into the close.  Everything was being sold, breadth was a solid 3 to 1 favoring the downside.  Volume rose more than 27% on the NASDAQ and 26% on the NYSE from Monday’s trade.  CBOE total put call ended the day at 1.29, not at extreme levels but still pretty high.  The VIX index jumped to 26.30 exposing the type of selling, panic selling.  More fears surrounding the housing market and Wall St. can’t stop listening to it. 

Lucky for me, I’m sitting on the sidelines watching this unfold.  The important take aways from this market is the constant attention we have to pay to price and volume action.  It is the only and complete picture of how the market is behaving.  Without analzying price and volume movements, we’d be lost and suferring significant losses in this market.

For those of you who use Telechart, best Charts on the planet: PERIOD!  Here is a sample from Don Worden’s report…it will show just how bearish the action was yesterday.

“Industry Groups gave us 239 declines versus zero advances. Major Industrial Sectors gave us 31 declines versus no advances. Four of the 17 Breadth Groupings had zero advances. One of those was the Dow.”

This market has been signalling to us that we had a weak rally on our hands.  Although it is still possible to get a follow-through rally here, its not likely due to the MASSIVE DISTRIBUTION (professional selling) day we experienced on Tuesday. 

I think it is quite silly to be positioning yourself for a rally here, I’d be mostly in cash.  If you were a mutual fund, you’d want to stick to stocks that have weathered this storm a bit but they must be showing great fundamentals.  I’d really have as much cash on hand as possible.  We will probably test the August lows at some point but, I think we’ll try the 50dma again at some point in the coming months.  All but the Primary trend is down, going long here will be quite dangerous. 

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