An eventful day as we had the NYSE halted for 3.5 hours and the Federal Reserve meeting minutes. At least for a while Greece and Chinese stocks took a back seat. Volume was considerably lower on the NYSE, but the reason is pretty obvious. NASDAQ volume was light on the session. By default we have bene raising cash as we have been receiving a few sell signals. Although we have been getting some buy signals they are not acting as well as we would like. This market is certainly back in a limbo state. As we enter earnings season we will have to remain vigilant.
What is slightly concerning is what is going on with the Chinese stock market and ultimately Emerging markets. The slide in Chinese shares is nothing but reminiscent of what took place in the NASDAQ after the March 2000 top. Whether or not the Shanghai follows the same path it is quite similar. The Heng Sang has been hit hard as well. How much more selling can these indexes take?
Even High Yield is still struggling:
AAPL is having a difficult time with its 50 day and now appears to be headed towards its 200 day moving average. The stock represents a large portion of the NASDAQ and Dow Jones Industrial Average. Check out its chart here:
The other interesting chart is the VIX. The index sits just under the 20 level and the S&P 500 has not even lost 5% from its most recent top.
We are getting near oversold conditions where a bounce becomes very likely. The best course of action is continue to execute a sound risk management process. Stick with the program and Big Wave Trading.
