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MV Weather Report: Late Day Hail Storm Buries Bulls

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Rain or shine, we review the day's biggest stock stories.

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It got nasty during the final hour of trading today as the S&P 500 sold off 20 points in the last 45 minutes. For the day, the index closed right at the low of the day of 1081, off -0.89% from yesterday's close.

There were a few reasons for the swift market selloff, the first being Dick Bove's downgrade of Wells Fargo (WFC) to "Sell" from "Neutral" after the company reported earnings today. Another possible reason is that Galleon Group was supposed to be liquidating some of its positions today. And finally the market traded mostly directionless so some are saying it was a technical break at 1095.

Today on the Buzz and Banter, Professor Jeff Cooper explained to readers how the cycles line up.

"The following 3 charts of the Wheel of Time & Price show some interesting relationships with time/price AND range.


Click to enlarge


Click to enlarge


Click to enlarge

"In my study of the swings of the S&P going back to 1941 (which have been detailed in a course Unlocking The Profits of the New Swing Chart Method) I found that clusters of relationships with time and price, ie 'squares' identified trend changes in the market.

"Such was the case at the March 2009 low.

"What is interesting about that low is while it may have been expected that the master square at 661 would be tagged since it is on the same line as the 1576 high and the 768 low (the 2007 high and the 2002 low respectively) the market did not satisfy a move to 661.

"Instead, the S&P stopped at 666 which is precisely 90 degrees from the date of March 6th.

"So, while there seems to be a universality of opinion that the S&P will kiss 1120 and satisfy that cocktail napkin charting, often times the market fails to satisfy the consensus."


After the final hour sell off, Cooper posted a buzz saying that the S&P will leave a "slingshot sell signal" because the daily chart turned up three days ago, and then back down today.

I think the bearish side should be respect in the short-term. Earnings haven't been great with the exception of Google (GOOG), Caterpillar (CAT), Apple (AAPL) and Intel (INTC), and a pause fits the pattern of the current rally. The pattern is, break to new highs, pause, sell-off, trade to new highs, and repeat.

Tomorrow will be a busy day on the earnings front as we wait to hear from Merck (MRK), Potash (POT), Amazon (AMZN), American Express (AXP), Capital One (COF) and many more.

Finally, to the right of this column is Ticker Talk. Anyone can use it, just click a ticker or search for a ticker, wait for the share your ideas box to pop up and join the conversation!

Have a great night!

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No positions in stocks mentioned.

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