Outside Down Day

Thanks for your patience last week as we didn’t post last week at all.  We are now back and will resume posting every evening prior to a market trading day (usually around 10 o’clock Central Time).  

The market seemed to be grinding higher most of the week we were gone until Friday when the jobs report was released.  In typical fashion, the market greeted the slightly better than expected report with some enthusiasm, only to give way to selling shortly after the opening and ending down considerably on the day.  As many of you know, when we have an up opening like that followed by a large selloff that doesn’t come back, we have the possibility of an outside down day and, indeed, the Dow suffered such a day on Friday.  In fact, all of the major indexes we follow recorded an outside down day:  NASDAQ COMP, SP500, SOX, HUI, RUT  [As a reminder, an outside down day is one that has a higher high than the day before and a close lower than the low of the day before.]

A couple of weeks ago when the broader indexes broke to new [relative] highs we were a little concerned that we would see a bigger rally than we wanted.  The broader markets did manage to rally to make up for lagging in the Dow’s run earlier.  But, Friday was a bearish key reversal but again not on very strong volume.  The advancing volume was a meager 220 million shares as compared to the average for the year so far of 864 million but the total volume was not strong enough to give us strong confidence this rally is over.

Price action alone does indicate a very negative day on Friday but that is not the only indicator that is important.   Our other indicators do show some loss of momentum in last week’s rally ending with the big reversal on Friday so we are anxious to see the trading this upcoming week.

Be Careful out there…

Dow Industrials:  11,120.04  -96.46
RYVNX:   17.90
RYAIX:  21.59
TLT:  85.10
BEGBX:  12.86