I have gotten several emails asking about last week's market action and whether we have seen a Selling Climax. Selling Climax A Selling Climax was first described by Richard Wykoff in the first decades of the 20th Century.  It occurs after a market has been trending down and suddenly, the market falls precipitously.  It is a scary time and the sudden fall causes large numbers … [Read more...]

Over the past few days many traders have asked me: "Could the recent decline have been predicted?" Well, I don't know about predicting, but certainly it could have been anticipated.  Let's see how. Using SPY The accompanying chart has the S&P Spydr, SPY on a daily basis.  This is the ETF for the S&P 500 and is a good symbol to watch when tracking the overall US … [Read more...]

In my weekend post, I mentioned that the market looked ready to try and rally, and I did think it would try.  Obviously, that didn't happen.  Instead, the S&Ps fell 86.5 points from yesterday's close, and as I write this at about 6:20 PM Eastern Time, the market is still heading lower. I was talking with David Weis after the close and he noted something I think important.  … [Read more...]

Well, it was quite a week.  In Deep Practice, we had discussed the 1189 - 1155 area as the potential stopping area of the falling market, so traders had an idea of what the market might do, at least for this leg of the decline. You can see on the weekly chart posted that we decisively broke the demand trend line.  This occurred on Tuesday.  At that point, it was pretty evident … [Read more...]

Given the gap open action in yesterday's overnight market, we were looking for higher prices.  Although the trade referred to in the last post worked OK, it did not produce a new leg up as expected.  Instead, buying dried up on the highs, sellers stepped in aggressively, and we had a 40-point fall. Supply has returned to the market.  That being said, we have made seven … [Read more...]