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Stocks Take Another Shot from Sellers as Volume Soars
By BigWave_Trader on January 21, 2010
Sellers weren’t complacent today selling stocks on massive volume. The NASDAQ had heavy volume from the get-go, but buyers stepped up in the morning. It wasn’t long before things turned sour and sellers took over pushing stocks lower. Back to back distribution days for the market is not something we should take lightly and especially the volume that has come in the past few days. This type of action should be a warning sign of trouble ahead as this uptrend looks to be finished.
Back in October we were faced with a similar situation where we had a lot of distribution days piled up. However, we lacked the massive volume we are seeing now. October did look bad and under any other scenario the amount of distribution we had in October would sink about every uptrend. Except this one and now we are looking like this one is about to be over. Check out a chart of the NASDAQ:
As you can see the volume we are experiencing is a warning sign of things to come. If we had been able to get back to the highs on the NASDAQ today we may have been able to shake off Wednesday’s action. Sadly, it appears this uptrend is on its last legs. Regardless of opinion it is time to raise cash and remove laggards from your portfolio and take profits.
Over the past few trading sessions the VIX has been showing sellers were simply not forceful. Today, a much different story.
While many are claiming a particular view of what is going to happen they simply do not have a clue. The future is unknown, look how many bottom callers were trampled in 2008 and top callers in 2009. What we have here is a market that is churning or make no further upward progress on massive volume. In most cases, this type of action signals a correction. Ideally, we’d have a 10-15% correction lasting 3 months to set up proper bases. Unfortunately for me my opinion doesn’t matter to Mr. Stock Market. Therefore, we’ll continue to take cues from the market and act accordingly.
The charts say it all, trouble lies ahead.
Have a great weekend.
Posted in Market Commentary