According to IBD, tomorrow's Big Picture column will change from Market Under Pressure to Market in Correction based on yet another distribution day for the Nasdaq as depicted above. A distribution day occurs when institutional selling weighs on market ie. volume is higher than the previous session and we close significantly lower. The Nasdaq shed 39 pts. or 1.4% on faster trade when the semis, as a whole, were downgraded. CIEN earnings also weighed.
Using the SPY chart below, we see the NYSE TICK indicator versus SPY price. We note that the opening gap and go scenario was not confirmed by the TICK readings. Prices were higher than Friday's close, and yet the TICK stayed in the neutral zone and notched lower and lower lows.The NYSE TICK measures the number of stocks trading at the offer minus the number trading at the bids. When buyers hit the offer, stocks rise, and when sellers hit the bid, stocks decline. So, a declining TICK reading cannot sustain higher market prices, hence a good shorting opp presented itself very early in the trading session.
Yesterday, I posted the IDCC chart above (bear flag) on Chart.ly and this morning I posted the chart below, as price reached the prelim. target.
The chart below is my trade. The trade triggered at $46.00 and since I didn't have a NRB, I gave it a $0.50 stop.
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