Yesterday, the markets tried to respond to Monday's failed rally. But again, in the afternoon the markets sold off. Yesterday qualified for a 90% Down day on the NYSE with 90.7% Down Volume. The NASDAQ, however, did not qualify and Down Volume was only 70%. Overall volume on the NYSE was 4.6 billion shares, below the 30 DMA of 5.9 billion.
All of the major indices are very close to support levels we must pay close attention too. For the Dow it is 10,186, the S&P 1089, & the NASDAQ 2242. Currently the Dow closed today at 10,298, the S&P 1092, & the NASDAQ 2254. The volume on the NYSE was 5.2 billion shares and picked up from the past few days.
The good news is the markets were resilient with the bad economic news coming out, namely the FED being cautious about the recovery and economic growth, and US home sales declining.
All of the technical indicators show the markets as being oversold and we should get a nice rally. However, the fundamentals are getting worse. Therefore, there is a tug of war and that is why I am holding some cash and not fully invested. Also, if I have to raise more cash, I will.
Now is the time to be diligent, watch closely, and let the markets show us which way the longer trend is going to be.
Keep studying,
Dan Stewart CFA®
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