Heavy volume selling grips Wall Street as stocks finish near the lows of the session. The early going despite the rise in prices and a large drop in housing starts was going well as the market was able to climb into positive territory. However, as the EU Energy Minister made negative comments about the Japan nuclear situation sellers took over and began to sell stocks. Sellers had yesterday’s lows in sight and were able to take the NASDAQ and S&P 500 below Tuesday’s levels. Regardless of whether or not these Japanese reactors are going to leak a massive amount of radiation into the air the market was and still remains in a correction. This recent action will take some time for the market to heal itself.
AAPL was the big story of the day where the stock was rocked by sellers as it is sitting well below its 50 day moving average. The bottom line for this stock, sellers are taking to it and sellers are going to push it lower from here. Perhaps over time it COULD rebound, but with the recent action in the stock it appears the 200 day moving average is in store for this stock. Oddly enough, the stock closed below its 100 day moving average as well. We may see support build in the stock, but if AAPL stock wants to return to its glory days it needs to cross back above the 50dma with authority.
The VIX had a terrific day showing fear creeping into the market as the volatility index closed up 5 points to 29.40. Reaching as high as 31.28 the index is clearly showing fear is showing its ugly head in the market. Although not precisely capitulation, fear is on the rise and as this market sorts itself out will help us get into another healthy uptrend (like the one from September 1st). Tomorrow we’ll get the AAII sentiment survey and it will be interesting to see if the recent selling and Japanese Nuclear Crisis has influenced these investors.
Volume skyrocketed across the board and the lift in volume came when the EU minister decided to drop a bomb on the market by saying the Japanese crisis is out of control! There has been significant pressure on the market up until this point and any straw will break the proverbial camel’s back. I think it will take some time to repair the damage done by the recent selling. This type of action has me reminded of the action after the flash crash. A rally here from these depressed levels would not surprise me here, but will be met with selling pressure. Anything is possible, but in stock market trading you have to be ready for all possibilities, but focus on the high probabilities! As always, cut your “stinkin” losses!
