Ctrl DOW Delete: Dave's Daily

It was a simple mistake according to CNBC that will surely lead to months of congressional hearings and SEC mandated "Computers for Dummies" classes. Stocks were heading south and, as the story goes, someone entered an order for billions in lieu of millions. Then the High Frequency Trading algos kicked-in exacerbating the situation. You'd think these computers would have some kind of governor on them to prevent such occurrences.

So, with the DOW down 900 points or so, I guess this was a buying opportunity for those in the know and with the guts to do it. Frankly, who's to say? The bottom line for me is Main Street won't like this and it will only deepen their distrust of all things Wall Street and keep markets a trading desk and hedge fund affair it's been.

Yesterday we posted a few charts with DeMark Indicators that reliably tell us a trend change, or at least trend exhaustion, was ahead. While not precise to the percent, these dominated many important markets given them added dependability.

Of course, all of this selling is the result of fear from Europe and stocks being much overbought as we've been discussing for weeks. The latter is no longer the case but protesters in Greece are being killed with violence potentially spreading to other countries where cuts must be made. The debt burden globally, including the U.S., is at ridiculous and unsustainable levels.

Suffice it to say, volume was extraordinarily heavy and breadth exceeded 90% to the negative.

 

The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

Per Investopedia: The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

Per Investopedia: The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge".  Our own interpretation is highlighted in the chart above.  The VIX measures the level of put option activity over a 30-day period.  Greater buying of put options (protection) causes the index to rise.

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