Coolhand's Market Analysis

"Operation Twist" was the big news event of the day and the market responded to it in convincing fashion, although the majority of losses occurred in the final half hour of trading, which was well after the initial news hit the wires.

The FOMC revealed that it would purchase $400 billion in Treasuries in the 6 to 30 year maturity range and sell an equal amount of shorter term Treasuries. It wasn't unexpected, so it appears to be a "sell the news" event.

The major averages all closed at their lows of the day, but the Nasdaq continues to outperform its counterparts in large measure and this shows up very well on one of the charts.

And speaking of charts, here they are:



NAMO and NYMO spike lower into negative territory and remain in sell conditions. Of note: NYMO has not hit a fresh 28 day trading low after today's sell-off. But it's not far from it.



NAHL and NYHL made a decided turn lower today and are also in sell conditions.



TRIN spiked to a high level and is highly suggestive of a short-term, oversold market. But on the other hand, TRINQ actually turned to a buy condition and suggests no such thing. If fact, this is where we can see just how strong the buying pressure has been in the sector as the 13 day EMA has trended lower since about the 8th of August. I'm not entirely sure what to make of that at this point, although I realize money has to find a home somewhere and this appears to be where much of it is getting parked. Normally this action would appear longer term bullish for the market, but "normal" doesn't really describe this economy from a historical perspective.



BPCOMPQ turned down again today and is looking more bearish. This is a longer term indicator, so it's very possible we could be in for some downside action beyond the short term. Not necessarily ugly, but the upside is now very questionable.

So one signal remains on a buy (TRINQ), but the system remains in a buy condition regardless. I think I can continue to consider that unconfirmed sell signal on 9 September as a valid warning in lieu of NYMO hitting a new 28 day trading low now. I remain 100% F Fund, but probing for an entry back into stocks. Buying support has worked very well for the past month or so, but has anything changed? Sentiment will probably get beared up again fairly quickly, especially if we can get some follow through action. If that happens, it may signal a good entry point is upon us. But it won't be a risk free trade either as this remains a bear market.