An interesting day on Wall Street as Q2 was set to wrap up. Big Cap stocks lead the way for the entire day spending most of it in the green. However, the NASDAQ, the leading index was pounded by Tech giants GOOG, AAPL, RIMM, MSFT, YHOO continue to roll over. Volume was lower across the board when compared to last Friday and Thursday. The holiday shorten week will certainly effect volume this week. Running into the close a wave a selling struck Wall Street sending both the Dow and S&P500 in negative territory for a bit but ending higher. Although ending in positive territory, the major indexes were well off their highs at the close. For those who were looking for a bounce certainly got a weak one signaling there may be more trouble ahead.

New Highs (NH) continued to be dominated by New Lows (NL) as NL outpaced NH by nearly an 8 to 1 ratio. Although these numbers are not at extremes it does show there is considerable weakness in stocks and is likely to continue. Extreme levels that could possibly make a turn is where NH or NL +/- 1000. We haven’t seen these levels since March when NL hit 1000+.  A new bull market will see the complete opposite in numbers where NH/NL begin to dominate.  Until then, there will be tradeable bounces however, no new bull market.

My two favorite secondary, second to price and volume indicators is VIX/VXN.  When the S&P 500 and NASDAQ hit fresh lows I want to see VXN and VIX hit fresh new highs.  Back in March when we made new lows both VIX and VXN failed to hit new highs.  Although we bounced, we began to roll over again and we are headed for fresh new lows.  Why is this important?  VIX and VXN show fear in the options pits, when option traders feel pain volitility soars!  Signaling to me that we’ve washed out.  This occurred on August 16th 2007.   I think we’ll be waiting awhile for VIX/VXN to confirm a wash out.

Enjoy the weather outside, if you can!

Enjoy

Market Speculator

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