August 4, 2011 (part 2)

I just got the volume numbers for today, and I am a bit surprised. With such a monster down day, I thought they would be just as positive as yesterday, but in fact there was a huge move to the negative side, especially in the S&P 500. The positive/negative numbers for last week and so far this week:

Monday, 7/25: 112.93/87.27

Tuesday, 7/26: 102.83/96.73

Wednesday, 7/27: 193.49/139.50

Thursday, 7/28: 183.48/135.11

Friday, 7/29: 184.26/141.02

Monday, 8/1: 166.57/101.41

Tuesday, 8/2: 176.68/99.74

Wednesday, 8/3: 130.72/140.09

Today, Thursday, 8/4: 75.76/125.83

That to me is a shockingly large move to the negative side in just one day. I'm not really sure when they take their volume numbers, whether it's going into the day, or possibly after the morning, since you can make a trade on these funds once in the morning. But with such a large down day, I would have expected these numbers to remain positive. I have found in the past when something like this happens, where the numbers move to the negative side and we keep going down, that something is up, some sort of turning point. Just speculating, but it appears we could have a relief rally, probably very strong, for a day or two or three.

But for long term I look at the Nasdaq 100 numbers, and they were much less positive today, which is again a little surprising, but still way too positive for a bottom to this decline. The positive/negative numbers for the Nasdaq 100 for this week:

Monday, 8/1: 222.01/53.26 = 4.17

Tuesday, 8/2: 240.34/52.81 = 4.55

Wednesday, 8/3: 240.41/46.94 = 5.12

Today, Thursday, 8/4: 155.96/51.61 = 3.02

So this was people exiting the positive side but not jumping on the negative side. For such a strong decline, I still say the above numbers have to be more negative than positive before we reach at least a temporary bottom. That doesn't mean straight down by any means. There will be rallies along the way, probably not more than a few days, but then we will head back down again until the Nasdaq 100 numbers go negative, meaning the red number is larger than the green number.

By the way, when I talk about the market crashing down to at least 1,000, I certainly don't mean straight down at all. It could take years to get there. There will be rallies along the way.

Rob