Big Distribution and New Low

Spy_10505

Just a quick post to follow up on yesterdays QQQQ posting, which noted the market and stock reversals that setup today’s break.  The DOW, S&P 500, and many other stocks and indexes suffered large-scale distribution, with many of them printing new downtrend lows on heavy volume (about 2.5 billion shares traded on the NYSE and about 2 billion on the Nasdaq).  Here we see the Spiders (SPY) closing on the lows and below the 200-day EMA on over 100 million shares traded vs. average volume of around 50 million.  As noted previously, traders can look to short reversal candles after weak rallies, like the 7-day one on weak volume that ended 3 days ago and lead to this break.

I took some short profits on this move, but suspect I was early.  The reason I closed the position is that I’ve been working a rule to take second chances to get out with trading profits on positions that went under water after they were entered, which was the case on my most recent QQQQ short, which went on a little early.  Still left the XLE short open as that one was entered 10% above current levels.  Cheers!

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