I figured we might get some continued downside in the broader market today, but I’m always surprised at how swift and rapid these sell-offs actually are.  Let’s take a quick look at the action so far as we near 2:30 EST in the trading day.

I’ll be using one chart created ‘on the fly’ from Tradestation, showing the DIA’s 5-minute chart with the Breadth window overlayed on the chart:

(Click for full-size image)

I’ll try to analyze the action later this evening, but the day began with a near perfect bear flag into resistance (via the combined 20 and 50 period moving averages) which set up a nice trade (which was confirmed by a new momentum low - this is my “impulse sell” trade).  The target was the intraday S1 pivot (pink line) which was exceeded.

I still expected lower prices and held a core position with a stop just above the falling 50 period MA which came ever so close to being executed, but I’ve found to play core positions with a looser stop because large moves in the intraday market are often preceded by a ‘false’ swing which often take out close stops.

Nevertheless, price fell back down into a new impulse down to the bottom of the Bollinger Bands before swinging back up to form yet another classic “doji at resistance” trade set-up which surprised those who took the trade with a large intraday windfall profit (with the target above the S2 Pivot, which was quickly exceeded).

We’ve formed a new momentum low and a large impulse down.  The 15-minute chart (and somewhat on the 30-minute chart) showed a classic bear flag for the intraday action so far (check it out).

I’m also including a ‘real time’ (intraday) image from StockCharts.com which shows that the DIA rests at the rising 50 period moving average (while the Dow Jones - not pictured - actually went beneath this level today).

Let’s see how this wild day (but welcome because of its increase in volatility) resolves into the close.