Courtesy of Fibozachi
There was a plethora of shooting stars and gravestone dojis Thursday across the components of the DJIA, NASDAQ and S&P 500. Both of these candlestick patterns exhibit long upper shadows, where price at open and close are very close in proximity to each other, near the low of the candle. The long upper shadow indicates that bullish intra-day momentum has exhausted itself, which enables sellers to push price back down towards the open. After an exhaustion gap opening across US equities, sellers not only effectively regained control by session’s end but their new-found bearish momentum will carry forward into the next trading session. Weakness that permeates beyond the opening hour tomorrow will likely bleed into late Monday if not mid-day Tuesday.
So when exactly did these bearish reversals occur ?
Despite the fact that a high was established for most major markets at precisely 12:48 (EST), the real fireworks didn’t occur until 15:28 (3:28 EST), where Volume of NYSE Declining Issues proceeded to more than double its daily tally in the session’s final half-hour … an extremely rare and impressive feat. This intense EOD sell-off tops any form of bearish activity in recent weeks’ memory. And while we stand eager to see what kind of legs this bearish momentum can develop into early next week, any significant market top (greater than 5 days and 5%) will be determined by the vigor, or lack thereof, of the ensuing reflex bounce. If this is to be a top of significance there is no need to fret either today or tomorrow … if The Top is near, there will be a lot of points to make and profits to take from banks to bake on the next 50%+ nosedive with nose-bleed speed … if this is anything more than a much-needed breather, the time to properly position will be in 1.5 – 2.5 weeks after a reflexive bounce exhausts itself and Fibozachi indicators start screaming (a day before everyone else knows what him ’em).
NYSE Up Volume / Down Volume
NYSE 1-Minute
VOLD: NYSE Up-Down Volume Difference
Proprietary Advance/Decline Indicator – 7 Primary US Equity Markets
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