The market remains in turmoil as a morning rally was sold within the first hour and the market sunk lower almost the entire rest of the day. The only respite was an early afternoon bounce after the S&P 500 hit its key 200 day moving average. After a quick bounce of about 8 S&P points from 1380 to 1388, the index began to roll over again. It came back to test that key level in the final 10 minutes of the day and once it broke the S&P flushed down another 3 points in minutes to close at lows of the days. The S&P finished down 1.22% and the NASDAQ 1.42%. The action is finally creating oversold conditions which we’ll talk about in later in the recap. There were no new reasons per se today for the selling; the same fiscal cliff and European worries were offered.
First to the indexes – the S&P 500 was the last of the major indexes to test its 200 day moving average; all the others had already broken below. As noted above this level provided support for all of a few hours today before cracking in the final moments of the session. Today you see a few new lines on the chart in orange – these are Fibonacci levels, named after the famous Italian mathematian. Before you laugh, stocks have an amazing ability to retrace to key Fibonacci levels and use them as support for bounces – the 3 main ones are a 38.2% retrace, a 50%, and a 61.8%. So from the June low to the September high you can see this index is quickly approaching the 50% retrace of the entire move.
The NASDAQ has been in utter freefall, now nearly 100 points below its 20 day moving average. Right below are lows of early August, and below that (if and when) are lows of July.
Apple (AAPL) has simply been crushed. Multiple support levels have been broken and today it broke through the 20 WEEK moving average (not shown on the chart below) at $560. The volume today was immense as it smells of capitulation spelling i.e. when people who have been holding onto it for weeks on end of selling finally threw in the towel. Hence it should be poised to rebound soon. But catching a falling knive is tricky and everyone who has tried thus far has left with fingers missing.
The McClellan Oscillator is now reaching levels it has bounced from the last few selloffs; that said it *can* go lower as we saw in the spring and summer.
Black Friday? No more folks. You now must begin shopping Thursday evening as retail giant Walmart (WMT) announced it is opening its door at 8 PM Turkey Day.