It’s amazing. The stock market got hit hard yesterday…and every bull on Wall Street tried to say that they saw it coming. (In other words, they said the same thing they always say when these moves take place.) That said, most of the perma-bulls did get one thing right, the decline we’ve seen so far is not a major one at all. Sure, yesterday’s drop was a big one for a single day, but the S&P stands only 4% below it all-time highs! Even the Nasdaq…which is about 8% below its own highs…has still not declined to the same degree it did in late February/early March of this year…and September of last year. On both of those occasions, the Nasdaq fell into official correction territory before it bottomed.
Therefore, the good news is that the stock market’s decline has not been very significant…and this could merely be the kind of normal/healthy pull-back that all bull markets see from time to time. The bad news is that it could (and probably should) fall further before the market bottoms-out. No, that doesn’t mean it cannot bounce for a couple of days. However, despite what several pundits tried to claim yesterday, there wasn’t any “panic” in the marketplace…and there wasn’t any “capitulation”…which is something we usually see at a bottom of some importance.
When we see panic or capitulation, it always includes a huge jump in volume. That has not taken place at all this week. The volume on the composite volume was over 3.2bn shares…which is nowhere near the levels we’ve seen at the panic lows of last March…when those number reached 7bn shares several times! Also, although the volume in the QQQ Nasdaq 100 ETF reached 89 million shares (which is high for the past few weeks), that is s much ...
