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Tuesday, April 21, 2009

Reasons Why Yesterday Signals a Trend Change

Reasons why the sell off yesterday was not just a profit taking correction, but a trend change.

1) Yesterday was a Major Distribution Day. When this occurs AFTER a large, long rally it signals a trend change.

2) After a big decline in volatility (VIX) the sell off was confirmed by a 15% spike in the VIX.

3) The US dollar index (USD) strengthened, clearing resistance and is now above both the 20 and 50 day EMAs. A strengthening dollar represents a flight to safety and foreshadows weakness in equities.

After all, the market is The Most Overbought Market in at Least 23 Years.


Vijay said...

Looks like we're going to test the bottom of the channel today. What would make you change your mind about the change of direction ben? If we broke back into the channel?

oh btw, how could you like using the NYSA index instead of the S&P?

Caleb Banister said...

What constitutes a major distribution day?

DiverCity said...

I still don't think it's a trend change as long as the market is so clearly manipulated.

Bala said...

how to get $NYDNV:$NYUPV in to find major distribution day
-- Bala

Jonathan B. said...

in other news, the tea leaves at the bottom of my cup suggest we're moving higher tomorrow, as they are clearly tracing out a flying squirrel pattern, which always portends a rally. or maybe if it was so easy to make money, any moron who can read a chart and follow monkey rules could be rich. if only the world were so nice...