By: Tom Gentile
on September 13th, 2022
If you want to see what a bludgeoning looks like in the stock market, as in the markets got bludgeoned today, look no further than today’s price action. The Dow Jones Industrial Average closed down 1276-points. It’s been a long time since I saw the NASDAQ down over 4% let lone the 5.16% it was down today. Might as well mention the S&P, which was down over 4%.
They gapped down and traded down the ENTIRE day. Sometimes you see price volatility in that the markets will swing higher in price and then lower a couple of times or mor. NOT today. Things were in free fall basically all day.
The August Consumer Price Index report.
The reading came in at 0.1% higher than expected. And, if one excludes food and energy, the inflation gauge rose 0.6%. Both of those numbers were higher than expected.
The markets don’t like surprises and if you needed any evidence to that, today proved that to the extreme.
Wash Out Day?
A wash out day is one where the selling happened at an extreme level, and it could be that many or most of all the stocks that were going to be sold were sold – they were all washed out.
The expectations after a wash out – type day is that since most everything was sold, all who are left is buyers. A day like today can also be looked at as a ‘capitulation’ day.
It doesn’t mean they WILL buy, and it doesn’t mean the markets will immediately snap back higher the very next day. There may be a bit more carryover of some selling for those that weren’t able to dump all they wanted on the potential wash out day.
Should this be a day where the majority of things to be sold were in fact sold out, one might consider looking for some of their favorite stocks to go after ‘on sale.’ I mean the markets saw 4-days in a row of price action higher. Call it dollar cost averaging if you want, but there were some bulls out their accumulating stock.
Today’s price action pretty much erased almost all the gains over those past 4-days, but maybe some buyers are out there ready to pick up some pieces of a market that got beat up rather good today.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
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