SPY and QQQ Hit the Canvas - Again

Aug 24 12:08 2019 Print This Article

Stocks were hit hard in early August with SPY and QQQ falling six to seven percent in six days. These declines started from new highs in late July, which is when these prizefighters were at peak performance. The sharpness of the declines is like a prizefighter getting blindsided and knocked to the floor with a good left hook.

Sellers delivered another left hook on Friday. Why? Because selling pressure was stronger than buying pressure. Yep, that's about the only thing we need to know. Forget the blame game (Fed, Powell, tweets, tariffs, economy or whatever). Everything we need to know is reflected in price action. 

Stocks were short-term oversold after the first left hook in early August and a volatile trading range unfolded the last few weeks. This is the prizefighter trying to stabilize after the knockdown. He/She got up on his/her knees and perhaps even got one foot on the ground, but could only get halfway up. The same for SPY and QQQ. They managed to stabilize and recover around half of their prior losses, but could not maintain these gains and fell sharply on Friday. The prizefighters are back on the canvas.

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StockCharts.com was founded in 1999 by Chip Anderson, a 10-year veteran of Microsoft. StockCharts.com is a website that provides online investors with high-quality financial charts for making better investing decisions. StockCharts.com is focused on Technical Analysis - the study of price history via charts. They provide award-winning analysis tools, market commentary from respected analysts like John Murphy and Martin Pring, and a huge collection of educational resources that can help anyone become a better, more informed investor.

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