Thursday, October 11, 2007

Markets flush

Today's market comment graphic is courtesy of Dr. Carl Wyman, profiled by Barron's in 1984 as the original wall street wizard and still pumping out winning trades between frequent wilderness fishing trips. Thanks Carl.
Anybody who doubted the power of program trading got a rude awakening today when the Qs flushed away .90 in 30 minutes on 45M shares. The Qs volume picked up today (239M) to a level last seen on August 16th.
Today's drop was variously described by the news services as "profit taking" and "skiming the top off the Nasdaq". In other words, nothing specific. No question about it, today's wide range engulfing bar was a serious dent in the Qs progress. Although one day reversals are possible at this level, they are not likely. . so we may continue to see the typical pre-expiration week sell down prior to any renewed uptrend.
The VIX finally got a big goose today, sliding through the 10DSMA and running all the way up to the 20DSMA and now touching the upper band. That was a big move. Since the VIX did not close at the high today, we may see a continued rise tomorrow. Caution is advised.

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