Coolhand's Market Analysis

So much for support. As I suspected (and many of the rest us too) the market followed through on Friday's action and began the third quarter with not only heavy losses, but with the S&P 500 hitting a new 52-week low as well.



Not surprisingly, Europe continues to provide the market cues. Today, media reports circulated that Greece does not expect to hit a deficit target. That report along with a weaker September PMI Manufacturing Index (for the Eurozone) set the tempo early on.

On the domestic front, the September ISM Manufacturing Index was up 51.6 from 50.6. This bested estimates calling for a reading of 50.5. Construction spending turned higher in August, posting a 1.4% increase. Economists were looking for a 0.5% decline.

As a result of the carnage in stocks and the negative tone in Europe, the dollar advanced 1.1%, while the benchmark 10-year Note rose almost one point to end the day with a yield of 1.75%. Gold also found favor as it advanced more than 2% to about $1758 per ounce.

Here's today's charts:



NAMO and NYMO took another dive today and are now well into negative territory. Both remain on sells.



As I anticipated, downside follow through action sent both NAHL and NYHL much lower. They too remain in a sell condition.



I found the readings for TRIN and TRINQ a bit odd given the severity of today's sell-off. TRIN dipped a bit and remains in a modestly oversold condition. But TRINQ spiked lower and flipped to a buy in the process. I would have expected it to move in the other direction. I suspect this means we've got more work to do on the downside, which I'm anticipating anyway.



There it goes. BPCOMPQ did a nose dive today and appears poised to see lower levels in the near future.

So the Seven Sentinels are mixed, but overwhelmingly bearish. Officially, the system remains in a sell condition and I expect it to retain that status for the time being.

So now we're finally heading lower, but the trick is going to be picking an entry point; or if you plan to phase your buys, entry "points". Having only two IFTs coupled with the fact that today was only the first trading day of October will make for some potentially difficult decision making. If you're playing for the longer term (weeks to months), the decision may be a bit easier, but if you're playing for that next bear market rally then you'll have to consider how deep into stocks you'll want to get (risk vs reward). But remember, we may not get a bear market rally. At least not a big one. So make sure you take that into consideration too. I'll be watching for market indicators to clue me in on what to expect moving forward. Sentiment can only get more bearish after today, and that can be problematic for the bears.