EOD Market Sell off

T

tgtrader

I'm having a little bit of trouble accepting the general consensus reason for today's end of day sell off...

For the most part, news about the banks has been positive lately, and obviously a negative report in that context will spook a few people. But, for one, it isn't like Dick Bove is known for making great calls... (complements of ZeroHedge http://www.zerohedge.com/article/di...t-integrity-year-after-comparable-call-lehman )

The VIX spiked up over 10% during the end of the trading session. Selling pressure, as measured by the TICK index, hit a low of -1313... the lowest level seen since the September 1st sell-off of ~200 dow points. Looking at a 20 day 30 minute chart (the farthest back I get intraday data), the last 30 minutes of trading today had the highest volume over the past 20 days. All because Dick Bove, who thought it was a good idea to buy Lehman Brothers only weeks before its bankruptcy, downgraded WFC? Maybe, but I would definitely like to hear if anyone has any other ideas....
 
Vix traded right near 20 before bouncing, normally the dollar has been leading moves both ways but today they slammed sp's before the dollar started to move up. Also gold was diverging today from the dollar. We might get a move down to about 146 in the euro over the next week or two which could easily send the sp down towards 1000. Getting out of position longs seems like a good move.
One more thing that a technical analyst named jordan kotek said today bothered me. The only currency the dollar has been doing better than recently was the pound but the dollar is now going down vs the pound. Normally when the shittiest of things play catch up the move is coming to an end. I expect the dollar to bounce hard in the coming days weeks causing the stock market to go down. Bove just got the selling started a little early today.
 
There must have been a ton of people waiting to sell and when the selling started everbody piled on, including me. It has been my experience that selloffs like this extend to the next day. I sold my only long position and bought some double short S&P 500. If the market rallies tomorrow I will close my position. :)
 
There is nothing mysterious here. We've come of an expiration cycle where the market closed strong into expiration and now it is time for a little pullback. Likely close down tomorrow too, but who knows. If a dollar bounce occurs and has legs, then we could see more down. Watch the S&P trend line. We may be due for a little down and to the side action.

Keep in mind always that the main reason the market goes down is because it has gone up and vice versa. Tune out the hype and trade what's in front of your eyes. The media is compelled to state a reason for market moves. When they are right it is only coincidental. They are wrong as often as they are right.

In the normal course of the markets, pullbacks furnish the fuel for the market to move higher. So every pullback is a refueling event. The greater the pullback the more fuel taken on.

In constant dollars the market hasn't gone up much. And that's how it should be in a bad economy.
 
Quote from tgtrader:

I'm having a little bit of trouble accepting the general consensus reason for today's end of day sell off...

For the most part, news about the banks has been positive lately, and obviously a negative report in that context will spook a few people. But, for one, it isn't like Dick Bove is known for making great calls... (complements of ZeroHedge http://www.zerohedge.com/article/di...t-integrity-year-after-comparable-call-lehman )

The VIX spiked up over 10% during the end of the trading session. Selling pressure, as measured by the TICK index, hit a low of -1313... the lowest level seen since the September 1st sell-off of ~200 dow points. Looking at a 20 day 30 minute chart (the farthest back I get intraday data), the last 30 minutes of trading today had the highest volume over the past 20 days. All because Dick Bove, who thought it was a good idea to buy Lehman Brothers only weeks before its bankruptcy, downgraded WFC? Maybe, but I would definitely like to hear if anyone has any other ideas....
More...

the selloff was something to behold - after days of every single back tick being bought, the bottom all of a sudden just dropped out

vix bounced off it's 200 month moving average of 20.53

<img src = "http://www.elitetrader.com/vb/attachment.php?s=&postid=2613942">
 

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