So far so good - yes - good. We need to get some of the stress out of the market and down days are the way to do it. We don't care how far the Dow drops because we don't hold any Dow stocks - do we? No. Actually 7 of the Dow 30 are up with CAT leading the way. MSFT is also up on a relatively poor earnings statement. Several years ago I was holding a pot full of MSFT ATM calls into earnings and they came out with absolutely great earnings and great guidance which I had expected. The next day they opened down a buck and they never recovered - at least not by the time my options expired worthless. You can't predict the reaction to earnings.
Anyway this is a wrap so here are the current figures - the up/down ratio is up a bit to 32% but the 20-day new high/low ratio is down to 35%. The VIX is over 7% so I have to say that we are getting the stress out of the indices and that is a good thing.
A couple of other things are going on and you should pay attention to these too - the PCRATIO is starting to top out. It generally goes up in a down market and vice versa. The VIX is also looking toppy.
We may get some turnaround this afternoon. In the past half hour I've seen some possible short covering in the DIA, the Q's, GS, and the SPY. Here's what that might look like in the Q's. This could shape up to be a bottom - time will tell and I'll publish the rest of the chart this evening at the wrap.