Mr. Market Calls In Sick ~ The Risk Averse Alert

Monday, August 30, 2010

Mr. Market Calls In Sick

Pathetically weak seems an apt phrase describing the market's condition here. There simply is no bid to be found.

Two weeks ago in "Confirming the Hindenburg Omen" I noted similarity to the May-June 2008 period. This similarity apparently continues with the market's inability to attract a sustained bid. So, forget about still rising momentum more recently highlighted here, and consequent possibility of a decent bounce. This same condition existed back in May-June 2008, and we know where that led.

OEX 5-min

Despite there being no sustained bid some measure of support does appear to be developing, as the relative strength of selling occurring in the range of trading over the past five days is flattening out, suggesting the intensity of selling is diminishing. So, the projected, near-term completion of five waves down from August 9th finds some technical basis supporting this likelihood.

Now, it is also possible that, these five waves down ended last Wednesday (were wave iv seen ending last Monday, shortly after the open). So, correction of the market's move lower since August 9th might be underway here. This, too, might explain relative strength's greater balance between the buy- and sell-side over the past five days.

Given the possibility five waves down from August 9th already are completed, there still is the matter of last Tuesday's gap lower and coincident RSI collapse to its lowest extreme yet. This is seen indicating more selling yet to come. Whether immediately (as five waves down are completed), or following a bounce (as five waves down are corrected) presently is unclear.

Fast Money
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