Yesterday’s bounce and then give-back into the close is indicative of bear markets. Today’s big opening plunge and then rally and then back to the plunge which actually results in huge spikes in volatility is also indicative of bear markets. But both are also indicative of panic selling which is what we are now seeing as stocks literally are being pummeled. At 1:25 the plunge is rapidly pushing the SPX down to 1800. With a loss of 2.72% to 1:25 what is interesting is that while the SPX and Dow are plunging the Russell 2000 is down just 1.40% so far and it has been the market index that has led much of the recovery.
Russell 2000 Intraday Oct 15 2014
Looking at the Russell 2000 this morning you can see the collapse down to 1040 which broke the 1050 support level. There is not support at 1060 or 1040 but 1050 is important to the Russell 2000. However with the Russell 2000 drifting sideways and lower, buyers have been picking up shares of the small cap stocks. This could be signs that shortly we may see a bottoming process or it could just be bargain hunters as the Russell 2000 is trading at levels not seen since fall 2013. When 1040 breaks there is no real support until around 1010 in the Russell 2000.
Russell 2000 Intraday for Oct 15 2014
Dow Down 450 Points
Meanwhile the Dow just fell 450 points for the day breaking to 15857.61. Believe it or not, the Feb 3 low was around 15340 so the Dow can still push lower but the selling is so intense and volumes so high that we are seeing an incredibly oversold market. A bounce has to occur either mid-afternoon back to I would think 80 to 100 points or certainly later this week. A big down day like today is bound to bring out bargain hunters, myself included.
Dow Index down 450 points
Outlook Into The Afternoon
Into the afternoon with the VIX Index at $30.11 up 32%, I cannot imagine the market sustaining this strength to the downside for the entire afternoon. It is anyone’s guess of course, but I would expect some respite this afternoon and then heavy selling into the close which could break below 450 points. Don’t be surprised if tonight on the news you hear that the down was down 500 points into the close but remember, there will always be another day. The panic from today won’t last forever.
Getting Out While I Am Getting In
This is the kind of market volatility that creates bargains and I have my shopping list at the ready. So while so many investors are “Getting Out” I am getting ready to “Get In” but I still think the SPX will try to break 1800 first.
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)