Two weeks ago I had a post called 1,280 http://www.theburningplatform.com/?p=18724. That was the 200 day moving average of the S&P 500. Technical analysts use the 200 day moving average like it is a god. Their computer programs are all programmed to sell if the market drops below the 200 day moving average. Well guess what, the market dropped below 1,280 this afternoon and surprise, surprise – Wall Stree computers hit the sell button. Look out below. The S&P 500 is now at 1,258.
By the way, gold is up $32 an ounce to an all-time high. Sure sounds like a vote of confidence in Obama, Congress and their grand compromise to cut spending some day some time some where.
Oklahoma Dan says:
Jim,
You are forgetting about the SUPER COMMITTEE!!
Those superheroes will surely save us.
Well-loved. Like or Dislike:
8 
0
2nd August 2011 at 4:10 pm
Administrator says:
I think I got a wiff of panic at the close. See what happens when Bennie stops pumping $4 billion per day into the stock market.
Well-loved. Like or Dislike:
6 
0
2nd August 2011 at 4:10 pm
Administrator says:
Being short the market and long gold and silver feels really good right now. I think I’ll have a beer on the patio tonight.
Well-loved. Like or Dislike:
16 
0
2nd August 2011 at 4:11 pm
Centerfield says:
Congress agrees on a watered-down, pile of shit piece of legislation, only to see billions upon billions of shareholder’s equity evaporate within hours of their poor choices. The Dems wanted to tax the rich, huh? Well, they got their wish when the markets basically said fuck you all. But they and their MSM brethren won’t ever see it that way. Fuckwads. They can all eat shit and die.
Well-loved. Like or Dislike:
11 
1
2nd August 2011 at 4:18 pm
Administrator says:
The Dow was at 12,724 two weeks ago. It is now down 858 points in two weeks, or 6.7%. What is that starting to hit the fan.
Well-loved. Like or Dislike:
8 
3
2nd August 2011 at 4:19 pm
Administrator says:
Bernanke and Obama in class
Like or Dislike:
4 
0
2nd August 2011 at 4:20 pm
Administrator says:
ANYONE WHO BELIEVES IN THE DOW THEORY GOT AN UNEQUIVICAL SELL SIGNAL TODAY
DOW at 11,867
DOW Transports at 4,942
Dow Theory sell signal on horizon
August 1, 2011, 10:55 AM
Monday morning’s stunning reversal, from a triple-digit gain at the open to a double-digit loss, is discouraging not just because it indicates that the market faces more challenges than just the political paralysis in Washington. It also puts a possible Dow Theory sell signal back on the horizon.
The crucial levels to watch, according to Jack Schannep, editor of TheDowTheory.com, are the June lows for both the Dow Jones Industrial Average DJIA and the Dow Jones Transportation Average DJT — at 11,897.27 and 5,060.59, respectively.
If both averages fall below these levels, it would be quite bearish according to the Dow Theory — especially since it would come on the heels of what Dow Theorists refer to as a non-confirmation, because in early July only one of these two averages was able to surpass their April highs.
We’re not there yet, so Dow Theorists remind us not to jump the gun. But the Industrials are now only 1.7% away, and the Transports 2.2% away — a lot closer than where they were at this morning’s opening, and close enough to make the bulls sweat.
-Mark Hulbert
Like or Dislike:
2 
0
2nd August 2011 at 4:28 pm
Administrator says:
Average American
Here they come.
Well-loved. Like or Dislike:
14 
0
2nd August 2011 at 4:50 pm
Muck About says:
The loss of 188 point of the Transport Averages to 4942 today was simply a killer. If – IF – it doesn’t recover (which I’m sure it will partially tomorrow and the shorts cover), the economy is fucked.
The Transports are a leading indicator of economic activity. Bad transports, dead economy. Part of today’s action was, no doubt, panic induced. BUT – let’s wait a day or two and see if the Transports recover. I’ve never seen such a loss in one trading session before (now watch – some smartass will look up the data and show how dumb I am!) and even if it has happened, it’s really rare and very scary. Percentage-wise, that’s a big drop..
Tomorrow will be bounce back day – but next week is when it probably will show where things are headed. If tomorrow is not a bounce back (or stay even day) and turns into a rout, then all bets are off and Miss Katy gets to bar the door! (love that saying)….
MA
Like or Dislike:
3 
1
2nd August 2011 at 5:02 pm
Muck About says:
As far as DOW Theory is concerned, an awful lot of people trade based on it. But it’s hooey.
Dick Russell (a friend of mine since the ’70′s) adapted it from Charles Dow’s work and made it a noun. Unfortunately, using the DOW Theory, his subscribers (of which I used to be one for years) were kept out of the biggest bull market of the 20th century from 1983 through 2001. He sadly was wrong for 18 years and I still love him like a brother because he stuck to his guns. But he cost his Dow Theory Letter subscribers a lot of money. (yes – me too until I changed my mind and decided to buy high and sell higher!).
The “draw down” problems with DOW Theory is large; i.e. before you get a buy or sell, you’ve either wasted a lot of time getting in or lost a lot of money before getting out. I like my MRO better.
But Dick Russell is still a champ in my eyes for just showing up all these years!
MA
Like or Dislike:
1 
1
2nd August 2011 at 5:12 pm
Muck About says:
@Admin: shithousemouse!
MA
Well-loved. Like or Dislike:
8 
0
2nd August 2011 at 5:15 pm
Administrator says:
Muck
What is your system saying to do?
Like or Dislike:
0 
0
2nd August 2011 at 7:26 pm
Buckhed says:
Muck…many of the Stock News Letters believe in “Buy High,Sell Low…Make It Up In Volume “.
Like or Dislike:
3 
0
2nd August 2011 at 9:10 pm
newsjunkie says:
Muck,
Is it time to “point it East and then assume the position for atomic attack”?
Like or Dislike:
1 
0
2nd August 2011 at 9:46 pm
Golden Tool says:
I’m trying to find the article but someone had 1 bil put on the S&P. Heh…guess someone is a happy camper. When I heard about it all I could think was damn that is brilliant and ballzy. Must be nice working for the banks.
Do unto blah, blah.
Like or Dislike:
0 
0
2nd August 2011 at 9:48 pm
Administrator says:
By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — It was unrealistic to expect the 200-day moving average to forever support the stock market, of course.
But when it finally failed on Tuesday, it did so in a big way.
You may recall that the 200-day moving average had provided support on several occasions in mid June, and as recently as Monday of this week. On each of those prior occasions, the market dropped to the vicinity of that level and then turned back up — tempting some diehard bulls into thinking that it would continue to provide support, no matter what silliness Washington would serve on the American people or what terrible economic news got reported.
/quotes/zigman/3870025
SPX 1,254.05, -32.89, -2.56%
1,4001,3501,3001,250JJA
Those illusions were shattered on Tuesday, when the market didn’t pause long enough at the 200-day moving average to even wave goodbye. The S&P 500 /quotes/zigman/3870025 SPX -2.56% ended up closing 2.4% below that level.
How bad is it that the market so decisively violated this key technical level?
Many technicians consider breaking below the 200-day moving average to be the official end of a bull market. So, at least according to this definition, we’re now in a bear market.
Furthermore, even though the market is overdue for a snap-back rally — given that it has now declined for eight straight sessions — the distinct possibility exists that the market will continue falling for several more days anyway. That’s because many mechanical trend-following strategies focus on where the market closes relative to the 200-day moving average, which means that a lot more selling may yet hit the market.
Is there any way for a bull to wriggle out from underneath the full force of this bearish news? One way to at least ameliorate it, which I suggested two months ago when writing about this subject, is to argue that the 200-day moving average has lost much of the ability it once had to be a helpful market timing indicator. ( Read my June 10 column on the 200-day moving average’s historical record. )
The reason for its diminished ability, some researchers theorize, is that the 200-day moving average has become so popular that followers have killed the veritable goose that lays the golden egg. And we very well may have witnessed this on Tuesday.
When, an hour or so before the end of trading, it became obvious that the market would close below that level, selling accelerated — with the Dow Jones Industrial Average /quotes/zigman/627449/delayed DJIA -2.19% quickly dropping more than 100 points. It’s quite possible that much of this selling came from investors getting a jump start on the sell signal that would become official at the close.
Does this mean that traders shouldn’t care about the breach of the 200-day moving average? That may be going too far, according to Blake LeBaron, a finance professor at Brandeis University, one of whose research interests is technical analysis — and who was one of the first researchers to document the moving average’s diminished market timing abilities.
In an interview Tuesday afternoon, LeBaron reasoned that the moving average could very well still be valuable as part of a more complex market timing strategy that incorporates many different technical indicators. In other words, even though none of those indicators individually deserves to be the basis for an all-or-nothing decision for our portfolios, they collectively can still be helpful.
The bottom line? We definitely should care about the market breaking below the 200-day moving average; we just shouldn’t base a sell signal for our entire portfolio on only this one technical event.
Like or Dislike:
1 
0
2nd August 2011 at 7:30 am