Big Bear October 9 Market Update and Trending Stock Scan

Oct 9, 2014: 12:19 PM CST

One thing’s for sure – the market always keeps us on our toes!

The intervention rally yesterday was short-lived as bears once again took a swipe at the market to create today’s intraday reversal (bearish) session.

Let’s see what happened, where we’re going, and which stocks may be the best candidates:

The same divergences that correctly forecast yesterday’s big rally and reversal (see my morning post ahead of the big rally) also forecast the top and likely reversal that set the stage for today’s session.

Momentum increased as price fell like a snowball rolling down a mountain, gathering strength (pressure) along the way.

Price remains in a downtrend in the context of the broader Fibonacci Retracement Levels (see prior update).

We’re waiting for another “Repeat Pattern in the S&P 500″ or else a failure of this pattern which would likely set in motion a steep sell-off in shares.

Each day price does not impulse higher, it sets the stage for the “This Time It’s Different” outcome.

Sector Breadth – like price – is showing very bearish indications:

The length of the bars above mask the broad-based selling in the market.  Financials are the “strongest” sector of the day with only 16% of stocks higher.

There isn’t much bullish evidence at all and we note that three sectors show all stocks trading lower with another three sectors having 2% of stocks trading lower.

This represents a decimation of buyers in an individual session (revealing strong money flow out of the market).

Very aggressive traders may look for a reversal and to play bullish stocks into the close:

Ventas (VTR), HCP, Simon Property Group (SPG), and Walgreen (WAG).

We should probably focus all our attention on bearish stocks (relative weakness):

Gap (GPS), QEP, Spectra (SE), and Charles Schwab (SCHW).

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Corey Rosenbloom, CMT
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