Stock Market Technical Analysis Blog
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Following up on last night's blog about the $6 SPY on balance volume divergence, we saw something exceptional today. This afternoon a bout of heavy selling took the SPY down $2 but also took the on balance volume down 75 million shares of net selling ending up with still having a $6 divergence. Normally with on balance volume divergences of this type, a day of heavy selling will pull the price considerably closer proportionately to its corresponding point on the OBV graph. Today though, the net selling was so heavy that the OBV fell just as fast as the price which is why the $6 is still there. On the left side chart above, the 120 minute bars chart of the SPY, I marked with a second pink dot where the SPY would be if it coincided proportionately with the decline from the red dot to the pink dot in the OBV graph. There is some serious selling going on behind the relatively slow and controlled downtrend in the SPY the past week and a half.
Looking at the right charts above, I posted a 120 minute bars chart of the Nasdaq above a daily bars chart of the Nasdaq. Looking at the daily bars chart where the QE3 pushed the Nasdaq onto a perch at the topside of its midterm channel, we see that the Nasdaq fell considerably back down into the channel this afternoon with selling accelerating into the final hour.
In the AAPL cluster below focusing on the 30 minute chart in the lower half, we see that the three day wide symmetric triangle broke to the downside today taking AAPL down to the lower line of its secondary channel shown with gray lines. It would be reasonable to expect Wall Street support to come in if we slip through that line tomorrow as they did on 9/11 and 9/12. Although with the speed of this descent there is no guarantee there.
One more notable item (I don't have charts of this shown tonight) is that over the past week and a half, every time the VIX spiked up the VIX Futures (VXX - tradeable ETF of the VIX Futures) hardly spiked up at all implying that traders felt no need to trade the VIX Futures up as they felt the VIX would be coming back down shortly with the Fed on the field. Today though the VXX spiked up just as much as the VIX itself signaling a change in sentiment about this QE3 rally.
Even though they could easily gap the market up in the morning on whatever convenient reason to see if they can trigger a daily 5/10 EMA bounce on the indexes and AAPL, it still might not be a bad idea to tighten your seat belts here.
Looking at the right charts above, I posted a 120 minute bars chart of the Nasdaq above a daily bars chart of the Nasdaq. Looking at the daily bars chart where the QE3 pushed the Nasdaq onto a perch at the topside of its midterm channel, we see that the Nasdaq fell considerably back down into the channel this afternoon with selling accelerating into the final hour.
In the AAPL cluster below focusing on the 30 minute chart in the lower half, we see that the three day wide symmetric triangle broke to the downside today taking AAPL down to the lower line of its secondary channel shown with gray lines. It would be reasonable to expect Wall Street support to come in if we slip through that line tomorrow as they did on 9/11 and 9/12. Although with the speed of this descent there is no guarantee there.
One more notable item (I don't have charts of this shown tonight) is that over the past week and a half, every time the VIX spiked up the VIX Futures (VXX - tradeable ETF of the VIX Futures) hardly spiked up at all implying that traders felt no need to trade the VIX Futures up as they felt the VIX would be coming back down shortly with the Fed on the field. Today though the VXX spiked up just as much as the VIX itself signaling a change in sentiment about this QE3 rally.
Even though they could easily gap the market up in the morning on whatever convenient reason to see if they can trigger a daily 5/10 EMA bounce on the indexes and AAPL, it still might not be a bad idea to tighten your seat belts here.
Updated big picture charts are shown below the AAPL cluster.
Alan
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