CHARTIST HOTLINE
Thursday, August 20, 2015
It’s not a pretty sight! Stocks were hammered in today’s session with the Dow tumbling 358, -2.06%, while the Nasdaq gave up 141, -2.8%, and The Russell 2000 fell 29, -2.4%. Declining stocks led on both the NYSE and Nasdaq by 5 to 1. The Actual Cash account lost $26,165, -2.33% while the Aggressive Account gave up $160,607, -2.35%.
The Nasdaq dropped below its 200 day moving average for the first time since last October, while the rest of the key averages are now substantially below their 200 day lines, and that includes the Advance/Decline Line. The S&P 500 just barely broke support at the 2039 level today. Looking at its chart pattern it could be at the bottom of its trading range or in jeopardy of declining to its next support level at 1980.
Traders should be aware that Illumina (ILMN) and Palo Alto Networks (PNAW) closed below their mental stops today and should now be sold. Blackrock (BLK) closed below its mental stop yesterday and was sold today at 321.81 for a gain of 13%. It goes without saying that Traders should monitor all mental stop closely, especially in this environment.
Our overbought/oversold indicator finished the session at -3.14 which is indicative of a heavily oversold condition. This tells us to expect a technical bounce. The last time it was heavily oversold was on July 27th at -3.33. A rally commenced the following day, but proved to be unsustainable and in the interim the July 27th lows have been taken out. Near term, the trend is negative. Our models however, although weakening, are positive and our advice is the same as it has been month after month -- Stay Fully Invested.
Our next regular hotline is scheduled for Tuesday, August 25th, 3:00 p.m., West Coast Time.
