The Danger Zone
A quick notes — as I got into Vegas late last night, and have a panel discussion in a few hours:
Yesterday’s close took us below the May 6th Flash Crash closing prices. The DJI, S&P 500 and NASDAQ that session’s intraday lows (at 10,241, 1094 and 2228, respectively). Closing below May 6th’s end of day prices is technically significant.
After the flash crash, we were discussing were this could go, and I could not help but think the intra-day lows of May would now act as a magnet.
This places us in a precarious position: The downside target is that intra-day flash crash low. If the volume lightens up as we approach it, that would suggest a “successful” retest of the lows, and set up the next up leg.
Volume continues to expand on the downside, suggesting that it is supply (not demand) driving the most recent action.
Market internals might provide some insight as we head towards those lows as to the probability of penetrating that level. If that occurs, the next level is significantly lower.
We remain overweighted in cash — not quite 100%, but damned close . . .
~~~
Futures are firming, but its still early.
I’ll update as we get fresh quantitative insights from Mr. Market himself . . .
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May 19th, 2010 at 8:28 am
Vegas? Isn’t real estate on sale there??? Are they still selling units in the Trump building? How many satellite branches (in preparation for bank failure Fridays) has the FDIC opened there? In terms of Vegas tourism, how long (or short) is the line at the airport to catch a taxi? Plan on visiting Hoover Dam to see the new bridge?
Or how about the Native American ‘see through’ bridge at The Grand Canyon (only 1 mile straight down…)
May 19th, 2010 at 9:06 am
Panel this morning, TV intervu, then the rest of the conference
I doubt I’ll get to any sight seeing . . .
May 19th, 2010 at 9:14 am
Quick question;
What do people recommend as the best website for monitoring the days trade volume?
May 19th, 2010 at 9:53 am
I imagine the PPT already knows this and will do everything in its power to prevent the breach. Watch for a huge buying spurt near the end if things haven’t gotten out of hand before then and we are near the danger levels. To me, it’s arbitrary numbers, but so many people watch these that it becomes something to be reckoned with.
powerpenguin: actually, the CNBC charts aren’t too bad although they are delayed 20min. Click on the particular index and the detailed quote will show the number of shares traded so far. Then click chart. You should first look at the monthly chart to get an idea of what average volume is. The daily chart will show volume as the day goes along. The problem is that its not linear. Someone comes in with a big burst at the end almost every day.
If you have an online brokerage account, they should have a pretty good chart somewhere on the site.
May 19th, 2010 at 9:56 am
The flash crash close was interesting, but, I still see the Friday 5/7 close of SPX 1110.88 as more significant on a technical basis. No breakdown below the May lows until we close below 1110.
There is a trend line from the October, November and February lows which woud provide major support around 1085 and set up a neck line for a complex head and shoulders top.
Below 1085 we would probably see a “Death Cross” of the 10 week below the 30 week which has not happened since 12/28/2007.
But like most of you say, VOODOO SCIENCE.
May 19th, 2010 at 11:12 am
OOPS…..looks like BR was correct about the breakdown below the Flash Crash close. it did not take very long to vacuum down to the 1110 number on the SPX.
May 20th, 2010 at 8:58 am
[...] noted yesterday, watch the May 6th lows –especially the volume as we approach that [...]