Big Down Day Causes Shock To the Systems

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October 5, 2005

A couple of systems I track all turned down except for one with todays sudden big drop. Just when everything was calling for a long the market dumps on you.

It looks like tomorrow could bounce with a multitude of things I won’t mention, but one item is 4-1 down volume on the Nasdaq. 4 to 1 usually spells overheated downside.

So with a mild upmove tomorrow I will likely have to cover longs and go short. If tomorrow is a “timer saving day” where the market can recoup at least half of its losses from today I think the long is still on for at least one more day.