Today is Thursday February 4th and what a whip out on Wall Street.
The Dow was down -266 points and the S&P -34 points on the session, one-sided market all day long. We were up against temporary resistance and what ever news came out today, sent it down in the premarket and it just kept on going down from there. There was a few good places to get short just after the open that produced multiple point gains for anyone who took it.
I quick mention about the market sentiment. On January 11th the market hit the high of the recent rally. It retested it on the 14th and 19th as well, same price 1147 S&P March Futures. On January 12th the sentiment was at its highest going back to December 07, almost 54%. That is one percentage point shy of what some would say a sell signal. When you combine that with bullish and bearish extremes together, it was the highest since 2001.
Since that time, January 12th, the sentiment numbers have been steadily dropping week after week. These numbers are put out by professional newletter writters weekly and represents there current view on the market, bullish, bearish or nuetral. The numbers were 53.4% , 52.2, 40 and 38.9% as of this week Tuesday. Now 35% or lower is usually considered a bullish signal and can often spark a sustained rally. The 38.9% figure came out on Tuesday well before todays drop. Depending on how the “Professional Newsletters Writters” view this recent sell off, it is possible we could be at yet another extreme, but back on the bullish side. This drop is one of the quickest drops in market sentiment that I can remember. It usually takes a lot longer to convince the so-called professionals that the market has turned. Next weeks numbers will be very interested to see since as I said, it has not taken in todays drop or any other price drops that may follow Tuesdays closing market. Something to watch.
I traded the afternoon session today and only had a couple of small losses and several gains to pick up my daily goal, but it was not as smooth as I wish it could have been. I did take a few non method trades and that bothers me. A couple of them did work out, but I almost consider that a lose even though they worked out for me.
The price action was a bit weird later in the day. The market was trying to absorb all the selling and the price action was really only to the downside. I caught the only meaningful rally long today, but I was running out of time and movement was really not very large. It turned out OK, but trading on the open sure would have been a lot easier and the movement then was a lot smoother.
Tomorrow is a new day, lets see if this market is going to sell off again or shore itself up. It will first need to get above 1066 S&P futures to start and slow the decline down. If it can do that with any meaningful advance behind it, that will slow things down and we could see 1080. If we continue to sell off, I could see 1048 to 1050 on the downside before a bounce comes back into play. The odds say that we continue with the sell off to the lower numbers and bounce from there. Today the cash S&P did close at its lows for the day, showing weakness going into the close. That is usually not a good sign for the opening bell, but tomorrow will tell.
That is it for today and good trading to all !
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