After what appeared to be the beginning of some kind of stabilization in this volatile market yesterday, credit concerns hitting the airwaves again today spooked the market into a sustained selling frenzy, dropping the Dow and S&P to 4 month lows. The financial heavy S&P has nearly wiped out its entire gain for the year. Poor results out of Home Depot (HD) and Walmart (WMT) were tempered a bit by a tame read on the PPI, but news from Sentinel Management that is was seeking approval to halt redemptions and Thornburg Mortgage saying that it was delaying payment on its dividend payment and that significant disruptions in the mortgage market have caused a "sudden and unprecedented" decline in the market prices of their AAA-rated mortgage securities was more than the market could bear. If there is any positive that could be taken from today it’s that volume levels were curiously light. Selling volume in the Nasdaq was well below average indicating that the big fellas were not dumping shares en masse today. The S&P is in the most trouble and closing at the 4 month low and below a one year trend line sets it up for further deterioration in the near future. The last time it closed below the 200 day moving average and that one year trend line was on Aug 3. That marked the beginning of a big 3 day rally up to resistance so keep an eye on another oversold bounce from these levels. The Dow has psychological support at 13000 and the Nasdaq sits just a hair below critical support at 2500 so tomorrow will be very important. A likely scenario is that the market will continue the selling momentum in the morning and follow that with some fairly healthy buying by the end of the day. However, I continue to believe that rallies of any magnitude just delay the inevitable deterioration of the market and provide a fresh round of short opportunities.
::: Major Indices Performance – The Numbers :::
(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST – End of Day August 14th 2007
Nasdaq: DOWN 1.7% today with volume 15% BELOW average
Nasdaq ETF (QQQQ) DOWN 1.7%, volume 5% ABOVE average
Dow: DOWN 1.57%, with volume right at the average
Dow ETF (DIA): DOWN 1.28%, volume 6% ABOVE the average
S&P ETF (SPY): DOWN 1.53%, volume 26% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 1.75%, volume 1% BELOW the average
::: SelflInvestors Leading Stocks :::
The Self Investors Leading Stocks Index is comprised of stocks in the Breakout Tracker, which is a database of the fastest growing companies near a breakout or having already broken out of a base. Leading stocks were hit hard today as small to mid caps bear the brunt of the selling, but volume was not heavy.
Summary:
* Decliners led Advancers 305 to 37
* Advancers were up an average of 1.15% today, with volume 12% ABOVE average
* Decliners were down an average of 2.99% with volume 7% BELOW average
* The total SI Leading Stocks Index was DOWN 2.54% today with volume 5% BELOW average
::: Where’s the Money Flowing :::
Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes be misleading. The only way that I know of to gauge industry/sector strength WITH volume levels is through the analysis of ETF’s. A couple years ago this was not possible, but as more traders/investors use ETF’s they become a much better tool for gauging the health of the market and seeing where the money is flowing (or not flowing). Using the proprietary SelfInvestors Demand Indicator score which measures price and volume movements, I’m able to quickly see which sectors/industries are seeing the greatest inflows of cash. For a detailed look at how I go about gauging sector/industry strength please see the following post: http://selfinvestors.com/si/industry_tracking/
* Current Leading Sectors/Industries (over last 30 trading days):
Just Bonds!
* Current Lagging Sectors/Industries (over last 30 trading days):
Broker/Dealers, Financial, Utilities, Gold Miners, Home Builders
* Today’s Market Moving Industries/Sectors (UP):
None
* Today’s Market Moving Industries/Sectors (DOWN):
Homebuilders, Realty, Retail, Broker/Dealers, Gold Miners
::: Stocks :::
The stocks section will be an area where I highlight one stock selected from a group of stocks moving up with volume well above average and most likely breaking out of a base or consolidation.
Sorry, no stock of the day today. Just one leading stock that I track moved up with volume today – Nvidia (NVDA)! This is very unusual even for a big down day like today.