Monday, October 18, 2010


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As I mentioned in the morning, the Nasdaq 100 has been trying to push down while Financila sector was pushing market up (see S&P 500 Financial index which advanced more than 2% today).

The average trading volume was lower today on all indexes which suggest that period of greedy buying is coming to the end (number of buyer becomes exhausted) and we could be close to the reversal move down. The interesting thing is that QQQQ has already declined about 2% after the market close, so, there is a possibility we may see sharp opening down tomorrow. If this is the case it could be a beginning of a strong correction down.

Over the last one and a half month (during up-move) we have not seen any strong correction (2% short-lived moves down cannot be considered as strong correction). The indexes went too high too fast over that period of time and this is not good.

Tomorrow, I still would watch the US Dollar index in parallel to my volume charts. At the same time would keep close eye on the volatility on the daily charts. If the volatility goes up, it could be a confirmation of correction and it may suggest to switch to lower time-frames.

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