To get more of Jeff Cooper's market insights, take a free trial of Jeff Cooper's Daily Market Report.
While many former highfliers, such as Baidu (NASDAQ:BIDU), Netflix (NASDAQ:NFLX), Qihoo 360 (NYSE:QIHU), and Workday (NYSE:WDAY), bounced hard yesterday (April 8) and look ripe for extensions, I think it is important to consider that the S&P 500 (INDEXSP:.INX) has not carved out a 90% down day. Multiple 90% down days within the context of an ongoing bull market often signify exhaustion.
Additionally, the S&P has not satisfied a turndown of its monthly swing chart. The presumption is that the strong reversal off the highs would perpetuate a turndown in the monthlies on trade below the March low at 1834.44. This would allow a cleaner snapshot of the position of the S&P.
While there is nothing to say that the S&P must turn its monthlies down, Friday's (April 4) key reversal day from all-time highs suggests that the S&P will do so, and that any rally prior to doing so is premature.
Of course, if the trend is turning down in earnest, a 90% down day could define a kick-off to the downside. Likewise, conspicuously poor price action following a turndown in the monthlies is an indication of a bearish trend.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.