Sorry I have not posted at all this week. A family member passed away this past weekend and the focus naturally has been on spending time with family. The funeral was today though and I came home this afternoon to a gruesome sell off from the market. Let's dive right in for some analysis.
Last week I featured a chart of the S&P 500 that highlighted a rising wedge (bearish formation) that suggested prices would break to the downside.
This breakdown came today as worries about deflation and the economy caused the S&P to sell off and close down almost 3% on higher volume.
Now while this breakdown was pretty strong it is important to note that this COULD be the start of a new downtrend. There are no guarantees. As you should be aware this market is extremely prone to reversals.
Looking ahead into tomorrow the price to watch is 1088 which is also where the 50 day moving average resides. Closing below it should signal further sell pressure.
On the bear side, FFIV, BIDU, and CRM all broke out of ascending channels to the downside on higher volume. This should trigger atleast a temporary top for these stocks. On the bull side though keep NFLX and PCLN on your close watch list. NFLX was one of a few stocks closing up today and PCLN is basing out for what is looking to be a decent bull flag.
Stay frosty out there.
[...] Journey explains why the economy is not relevant to investing. 15. Stock Trading to go posts about Speed Market Analysis — S&P 500 Rising Wedge Breakdown. He says that this breakdown came today as worries about deflation and the economy caused the S&P [...]