August 25, 2008
After three solid days of gains to close out last week, the market gave back all of those gains in one, single sitting. Financials led the way to the downside, followed by a minor uptick in oil prices. Anytime those two forces move together, it becomes an uphill battle for Wall Street.
We mentioned late last week, that in order for this market to continue its march upward, it would need to build upon last week’s gains in a decisive manner. Well, the exact opposite occurred, and did so, on low volume which just shows you on a day like today, how easy it can be for the bears to break the backs of the bulls. We now have a scenario where we have a nasty picture developing in the Nasdaq, where a break of last week’s lows would create a definite ‘higher-low’ and a ‘lower-low’ from a technical standpoint, which is very bearish.
The window of opportunity for the bulls is not closed, but another day like today, could reaffirm the worst for those trading & investing to the long side in this market, namely, that more selling lies ahead.
Here’s the Nasdaq and S&P Charts…