The market gave us 133 new lows on the NYSE and 163 on the NASDAQ, the most we have seen since last Monday, negative if you ask me. Declining issues led advancing issues by a 5-to-1 margin on the NYSE and an almost 4-to-1 ratio on the NASDAQ (two consecutive poor days after a week of positive readings).

The Dow was down 4.9% today giving us a weekly decline of 6.7% and a year-to-date drop of 34.4% (hopefully your retirement accounts are doing better, comparatively). The index did not undercut the pivot reversal low but today did mark the 8th day of a potential rally follow-through. The odds of a sustainable rally have dropped considerably since we are no longer within the 4-7 day range (a range that historically shows the greatest odds of a sustainable rally). Yes, a rally can occur within 4-10 days but the odds of it maintaining the trend lessens with each passing day. In addition, the major indexes are all trading below their 50-d and 200-d moving averages, a major red flag for any potential up-trend.

The US dollar was up slightly today and is one of the few areas of our market with a year-to-date gain, 12.2% to be exact. The dollar is actually up more than 15% since the 10/30 week moving average crossover buy signal that I highlighted in US Dollar Buy Signal on 8/24/08. I originally highlighted a possible turn of trend back in December of last year in a post titled US Dollar Snapshot.

I am not the only one that saw a bottom in the US dollar but I may be one of the few that believe this trend can last for some time. It will have many ups-and-downs but the chart of the Euro tells me that their currency is now in a confirmed long term downtrend. The 200-d moving average is now facing down, a very negative sign (the 50-d m.a. is also trending below the 200-d m.a.).
[Read more…]