Blue chip stocks opened below the low set on Dec. 31, 2009, breaking a bullish price pattern of higher highs and higher lows that began on July 7 by one reckoning, or on March 6 by another.
Using prices on the SPY exchange-traded fund that tracks the S&P500:
The long-running uptrend ended Jan. 14 with a high of 115.14, and opened this morning at 111.20, dropping rapidly to 111.01, the low so far today. The Dec. 31 low was 111.39.
The uptrend began either at the July low of 87 or the March low of 67.10.
The VIX -- the so-called fear index -- has risen to 24.16. That's 23 percent above the low of just three days ago. . . .
The signals I follow were universally bearish. Person's Proprietary Signal flashed "bear" yesterday at the start of a decline to a low of 111.56. The slow stochastic dropped from the 80-line to the 20-line in two days. The MACD dropped below the zero line two days ago. On the other hand, the 20-, 50- and 200-day moving averages are still pointing up, as expected of such lagging analytical tools. There's been no recent moving average crosses, and they are lined in ascending order, as expected. The decline to a hair above 111 brings SPY into resistance level set from mid-November to mid-December, when the market moved a lot but went nowhere. The next resistance down is a low of 103.80, set Nov. 2. The price is below the 20-day moving average. The next moving average resistance is the 50-day at 110.85. The 200-day average is far down at 100.89. |
One lower low does not a downtrend make. It will take a run upward and then a reversal below 115.14 to qualify as a downtrend, allowing a trendline to be drawn. The lower low is slight enough, less than one-tenth of a percent, to be the result of random noise. The next few days will tell.
Update: The low has pushed down to 110.69, so its slightiness is slipping.
Otherwise, Treasury long bonds are trading at the upper end of yesterday's range. Gold and oil are down, and corporate junk bonds are unmoving after yesterday's sharp drop.
In forex, the euro is within yesterday's trading range against the dollar, and the dollar dropping further against the yen.
No new pps signals on the indicators or the currencies.
In my holdings, PALM at 12.42 is showing a potential bear signal. Since this is a February covered call, with a strike price of 13, my basis is 11.80, below near-term resistance. I can afford to hold on.
Should the stock not recover by expiration on Feb. 19, I keep the stock and the premium on the call I sold.
I won't be doing a Watchlist before the close today. With large caps so unsettled, I want to wait and see what happens on Monday. I shall post a lookahead after the market close.
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S&P 500, SPDR, Spiders, Treasury bonds, high-yield corporate junk bonds, gold, precious metals, oil, petroleum, CVS, pharmacies, drugs, Palm smartphone Pre Pixi Plus.
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