Editor's note: click any chart to enlarge.
I don't see today and yesterday as the beginning of a crash. Today was a continuation of a correction that began last week when the market broke down below support in the positive trend channel it had been in for weeks. Here are a few charts that I think support this hypothesis.
Today the market continued to correct but ultimately found support during the day. In a 'crash' scenario, I don't think this would have materialized so early in the day and then held to the end of the day.
On the daily chart, we've drawn in support along the tops in the summer. This isn't to say the correction will test this support, only that it would be the last line of defense before a more serious decline.
In my blog yesterday, I pointed out that our short-term indicators were getting oversold. After today, they are oversold, nearly all of them. The CVI below has reached oversold levels we haven't seen since the bottom in June/July. The STVO has moved quickly through moderately oversold and is flirting with very oversold readings.
The STO-B/V are both now in oversold territory.
The negative reading on the DOWN Participation Index chart spiked oversold.
Looking at our PMO Analysis chart we see that %PMO rising has gone down to 4%, very oversold level.
Bottom Line: The market is correcting itself at this point and based on our oversold short-term indicators, this could be the end of it. Intermediate-term support would be around 1130. It will be time to reevaluate if it starts to test those waters.
Dollar is in a rally. Today we saw the dollar break above long-term resistance, out of the negative trend channel it has been in. You can see this in the daily chart, but it is even more prevalent in the weekly chart.
The reading on the weekly chart isn't "official" until Friday, but if it stays in this neighborhood, we should see the PMO bottom and possibly an even clearer break out above resistance.
++++++++++++++++++++++++++++++++++++++++++++++++++
SIGNALS: Here we include a picture of the current day's signal table to provide a kind of archive that can be referenced in the future. To access the current table with active links see the Decision Point Alert Daily Report.)
* * * * * * * * * * * * * * * * * * * * *
Technical analysis is a windsock, not a crystal ball.
