The Markets Giveth, Then Taketh Away
October 21st, 2005 by BWV
Wednesday’s trading was textbook bottoming action. A gap down (blamed on Intel earnings) with -3000 breadth during the morning.. basically a wholesale panic selloff.. which exhausted itself by mid-day.. and gained strength as the afternoon progressed and a buying panic erupted.
Breadth moved all the way to +2000 by the close.. the Dow finished up a tidy 140 points.. all on extremely heavy volume — a hair away from 2 billion shares changing hands on the NYSE.
I was ticked off to have missed some long side entries.
By 4:15 pm, all the commentators that I read online were calling this THE bottom.. Cramer being one of them. But there was so much b0tttom-calling, I simply did not believe it could happen in such an obvious way. Market turns happen quietly.. nobody blows a whistle for you. When whistles everywhere are howling, it’s a lot harder to trust the textbook play.
My distrust turned out to be correct in this case. Thursday was basically the inverse of Wednesday. The Dow down 133, equally heavy volume, and total breadth deteriorating, finishing -2800. We essentially gave it all back, as if Wednesday was a mirage.
While the last 2 days’ action improves the charts a little, I still do not trust this market. A breach of the lows from either Wednesday or last week, especially on a closing basis, will mean real trouble for the US markets. I prefer that it doesn’t happen, but I’m not in control.
