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A sea of red

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Equities are decidedly under pressure today as my U.S. Market Watch portion of my q-charts trading station shows a sea of red, with the only green coming from a stronger U.S. Dollar.

In the early going, we noted a few computer generated sell programs at this morning HL Camp & Company "sell program" premium level of -1.24 and that has had the S&P 500 Index (SPX.X) 923.79 -1.17% getting close to a test of its still trending lower 50-day moving average, which resides at 921 currently. Intra-day lows for the SPX.X have been 924, so bears still have some work to do before getting overconfident.

Yesterday's trading did have the NASDAQ Composite (COMPX) 1,331 -1.2% breaking back below its 50-day moving average of 1,360, and traders/investors that have identified this major market averages as one of the more technically weak, aren't that surprised that this is the first major average that is full of technology- related stocks to break back below its 50-day, after a break higher on August 19th. In recent weeks, we've noted that the NASDAQ Composite (COMPX) internals have lagged the NYSE Composite ($NYA.X) 498.28 -1.18% on daily breadth and new highs versus new lows, not to mention the bullish % charts. This was the "first place" a trader/investor looked for weakness and yesterday's violation of the 50-day has bears licking there chops. For further bearishness, an equity bear looks for NASDAQ action to then pull the S&P 500 (SPX.X), Dow Industrials (INDU) and NYSE Composite (NYA.X) lower.

Here's a quick look at my US Market Watch list of major market averages and indexes. The 5 and 10-year Treasury YIELS are at the bottom and the lowers YIELDS there signal some renewed buying today.

US Market Watch - Capture at 10:50 AM EST

With every sector and market average in the red, its not surprising that breadth is negative at both the NYSE and NASDAQ Composite. The big board currently has decliners outnumbering advancers by a 2 to 1 margin, while bread isn't quite as negative at the NASDAQ with decliners outnumbering advancers by an 8 to 5 margin.

New highs versus new lows is slightly positive at the NYSE with 19 stocks hitting new highs versus 17 stocks at new lows, but similar comparison is a different story with 38 stocks hitting new lows versus 14 stocks at new highs.

In today's 01:00 update, I will attempt to answer multiple subscriber questions from both OptionInvestor.com and premierinvestor.net regarding this morning's 09:00 commentary and my "prediction" for how I established my Dow targets and analysis there.

I briefly read some comments that Steve Price had regarding the taking of some partial profits in a previously profiled bearish trade in Maxim Integrated (NASDAQ:MXIM) $32.34 -4.54% from previous profile and couldn't agree more. After all, I was looking for a Dow decline of 4% in September and bearish traders in Maxim (MXIM) from OI's play list have a lot more potential profit riding in the trade at current levels than 4%.

Jeff Bailey
Senior Market Technician
Option Investor


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