Wednesday, August 3, 2011

First Real Panic Selling

For the first time in this selloff, we are seeing some real panic and people finally dumping some of the momentum names.  That's incrementally bullish.  I was hoping for a gap down to start the day to make it a bit 'easier' but this is doing the trick.

The S&P 500 broke the yearly intraday lows, post ISM release and we're going to get a snapback rally at some point.  People just don't want to put their hands out yet to catch the falling knife. 

I pulled the S&P 500 chart farther out than usual just to show how darn far The Bernank was able to affect the market with QE2 nearly a year ago.  Ironically, Jackson Hole Wyoming is only a few weeks away.

One of my favorite gauges - the % of S&P 500 stocks below their 50 day moving average was at a yearly low of 14% coming into the day.  Obviously this figure is lower at this very moment as we experience another selloff.

I'm more bullish today than I have been the past few weeks (again for at least a bounce).  That said crashes come from oversold conditions, so one must always have that in the back of your mind. (I'm not calling for a crash - its a low probability event)

The perfect bull scenario is a bad morning, that ends with a rally to take the market to highs of the day.  It's not always that easy, but if you see a day like that - it's a good thing.

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