August has certainly been interesting. On the past weekend I wrote that historically the first two weeks of August are worse than the last two. That certainly has not been the case so far this week.
The plunge today was brought about by a mix of issues. I have covered off all of them in many articles from oil to China to the high US dollar to emerging markets. But the most telling has to be that the market since the start of the year has been moving sideways without seeing revenue numbers increase for companies and without any clear indication from the Fed as to when the first rate increase will be done. This “will she or won’t she” approach to managing a country’s interest rates seems terribly at odds in my opinion with the economic powerhouse that the United States is. Pardon me for saying, but honestly this approach I think is something I would expect more from a third world country like Venezuela and not the United States. An economy as important as the US and as powerful needs a better method than what we have seen all year. But then that’s just my opinion and I am not a financial analyst, accountant, and certainly I have no MBA or Financial degrees of any kind but it does seem like a strange way to handle interest rate increases.
All of this has been building for sometime and the last couple of weeks we have seen much larger whipsaws in the markets on a daily basis. It is not surprising that today investors decided it was time to sell.
Bull Market Definitely Intact
The present bull market in my opinion is definitely intact. Corrections happen and while presently this pullback is not being labeled a correction, I somehow think we are on the cusp of one. But this will create terrific profit opportunities at some point.
Advance Decline Numbers
Volume moved higher again today with almost 4 billion shares traded. 87% of those trades were to the downside. 83% of all stocks were moving lower. New lows came in at 354 and new highs just 8. This is telling us that at this point in the pullback, a rally will be an opportunity to set up more trades to the downside. Investors need to see new lows back down below 50 and new highs above 100 before the market direction can enter an uptrend.
Expanded Market Direction
Tonight’s market direction outlook is expanded into the members only section as I discuss a number of key aspects of the decline in stocks today as well as strategies to be using or considering.
Members Only Market Direction Outlook for Aug 21 2015
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