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Market Recap: My Noon Call That We Had Not Seen The Lows Was On The Money

November 5, 2008 6:32 PM

It was somewhat of a difficult day, especially early on as it continued to try and reverse on every new low because of support and moving averages. Once I saw that the early low had been taken out and we bounced higher without a firm low, I smelled trouble and posted to “sell any and all strength here”. I also said near the open that “if we were going to see pressure it would likely come late - depending on where we are”. That proved also correct as we traded essentially sideways for 3 hours. This action normally spells trouble and I mentioned that I did not like this sideways action and normally leads to another leg down late once the moving averages catch up. This is basically what happened. Once the support and moving average traders could not reverse it, down she went into the close.

Again, when you see no firm low on selling pressure, like today, and then sideways action after a drop, like today, and the moving averages are above  - it normally is trouble. It tells me that traders are waiting for the moving averages to “catch up” to the down move and take it down more. If they wanted to reverse the selling today it should have come earlier in the day - when the moving averages provided little resistance. Once I saw sideways below the moving averages above for 3 hours, I thought big trouble was likely late and we got it. This is why i said “if we are going to see pressure, it should come late”.

Tomorrow may get very volatile depending on where we are at the open. If we spike lower here, it is a “close day”. I would like to see a rejection of some hard selling and a reversal, but I am very skeptical it can happen tomorrow. Many moves last 3 days, but this is not required for tomorrow because of the size of the drop today. If we open slightly higher tomorrow, I would be very skeptical, at best and early strength is likely to be sold.

What other free site will come out and make a stand that “the lows have not been seen”? None. You normally have to pay to understand “the game”. The market dropped nearly 300 points after that call. I am not always right as everything always depends, but I did call that we were going lower. How low was the only question.

Written by Tom@StockBlade.com · Filed Under Pre-Open 

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