NYSE Sank on Higher Volume as Indexes Close Out at the Lows of the Day

May 13, 2009

That sinking feeling ended up being spot on as stocks could not withstand the selling pressure. NYSE volume jumped higher while the NASDAQ slipped lower. However, the price destruction on the indexes have been far too much to qualify this market to be in a confirmed uptrend. It is in our opinion we have crossed back into a downtrend while this market will look for a short-term bottom. Leading stocks were hit hard; one by one they have been knocked down and out which is a BIG signal there could be more downside to come. The day certainly could have been worse, but the price action was terrible.

There wasn’t any support to be had at the end of the day like we have seen many times. Just last week Tuesday and Wednesday saw the market get support only to see Thursday’s market take a tumble on higher volume. Last week’s action, although bullish in nature was a sign of the market stalling. What is important now is to see if we can find footing in the market while having leading stocks setup in bases. There are a few left that might be able to form sound patterns and be worthy of going long. At this time, it is best to take a defensive posture and not let your capital slip away.

We are in a wait and see game with this market. Today wasn’t all that decisive to the downside with only the NYSE seeing increased volume. The bigger question was this just simply a pause for further upside or are we going to continue to the downside with increased momentum. This week was going to be the tell of the market and the first 3 days of this week have been quite negative on the outlook for it. One way out of this market is to see back to back days of major accumulation with growth stocks coming out on top. The IBD indexes must be leaders in order to sustain a health uptrend. Patience is to be practiced here as we wait to get confirmation to one direction or another.

Always obey rule number: cut your losses short!

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