The Bears Are in Charge

Thursday morning, the market shifted its focus from Europe and opened higher
following a jobless claims report that was slightly lower than expected. But
following a round of profit taking, traders shifted east again, to France. It
seems reports of a Standard & Poors downgrade of French debt resulted from a
"technical glitch" on its part and that the bonds retain the triple-A rating
remains unchanged. The Dow Jones rose 0.96%, the S&P 500 gained 0.86% and the
Nasdaq was up 0.13%. Volume on the NYSE fell to 904 million shares and to 522
million on the Nasdaq. Advancers led decliners at just under 1.9-to-1. Down
volume on Tuesday exceeded up volume by 18-to-1 on the Nasdaq and more than
30-to-1 on the NYSE. This is very high negative on balance volume and compares
with other big days down like Oct. 31 and Nov. 1. What is notable about each of
the indices' charts is that each has broken its 200-day moving average twice.
This is a nasty sign for the bulls since the second failure resulted in a lower
high and is accompanied by a sell signal from the stochastic. Despite the
negative, the index has managed to barely hold above its support line at 1,220.
Thus the current trading range is 1,220 to 1,275. Like the S&P 500, the DJIA
fell for the second time through its 200-day moving average, and although the
decline was not as deep as the 500's, it failed to recover yesterday. Its
trading range is now 11,650 to 12,200. And its stochastic also issued a sell
signal along with its MACD (not shown). Like the other indices, the Nasdaq, too,
fell through its 200-day moving average, but its fall is deeper and much like
the 500's. On Thursday, its intraday low at 2,601 almost touched the support
line of its trading range of 2,600 to 2,725. Nasdaq's stochastic, MACD and
momentum indicators have each turned negative.