Capitulation! Market Indexes Avoid Sliding Into Oblivion... ~ The Risk Averse Alert

Monday, September 15, 2008

Capitulation! Market Indexes Avoid Sliding Into Oblivion...

Now, that's what I call capitulation!

Sixteen declining issues for every advancing issue on the NYSE. Almost 7-1 decliners over advancers on NASDAQ. Hmmm. Why the disparity? Of course, I ask rhetorically. Still, on both counts it was the worst performance since the market's peak in October '07.

VIX ... the CBOE Put/Call Ratio ... crushed.

Volume ... went through the roof in financials, but was rather ordinary otherwise. Curiously, NASDAQ volume, January, July, and today — all as the Composite approached support in the vicinity of 2200 — is diminishing. This suggests an exhaustion of broad-based selling pressure.

NYSE New 52-week High-Low differential ... notably diverging from July 15, 2008.


With both NYSE and NASDAQ Composite indexes closing today below July's low closes, daily RSI diverges. Ditto MACD. Still, both are falling and squarely ensconced on the sell-side of their respective scales. Short-term divergences await...

Beware of getting sucked in by the growing sense of panic. Yes, there is still lower to go ... and further technical divergences to form. But an imminent crash event? Not when the likes of Nouriel Roubini are quoted saying, "It's clear we're one step away from a financial meltdown."

Just name me the last time the market crashed when everyone was bracing for it...

Fast Money
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