Today's gap open lower stands out by the fact that at no time during the day did the sting of the first five minutes spanking apparently diminish from traders' memory. At no time was the gap filled, despite RSI improving throughout the day.
These two observations taken together suggest selling might be about to intensify.
Just as I brushed off yesterday's late-day RSI divergence, I do the same with today's divergence (relative to the open) set during the 2:00 hour. Indeed, I consider the buy-side RSI divergence occurring around 3:30 today to be more instructive, and indicative of weakness presently underlying the stock market.
Today was the fourth straight day of some of the weakest turnover on the NYSE so far this year. This extends the notably diminished volume of shares traded since the March 17th low, and it further substantiates the fear I expressed last Friday under the headline "Thank You, Sir, May I Have Another." The genesis of last Friday's (4/4) analysis, in which I discussed the probability of March 17th's low being taken out, was at the conclusion of last Wednesday's (4/2) commentary titled, "Waiting on the Wall of Worry." There I commented how the volume of shares traded on the NYSE over the past couple weeks "is more a picture of complacency among those who strong hands wish to shake." Today's gap open lower manifests this foreboding observation to a tee.
Finally, from the "A Picture is Worth a Thousand Words" chronicles, map the like-color circles drawn on the following two charts and tell me what we should expect...
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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
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