The chart below is an “All US” breadth chart. So, you take all of the advancing stocks on the NYSE, NASDAQ, AMEX, and what have you, add them together, subtract out the declining stocks, and then plot the difference. I show here a 1-minute chart of Monday’s close through Tuesday’s open (click chart to enlarge):
As you can see, a net of about -1,800 stocks were very sad at the close on Monday, then got very happy at the open on Tuesday – until six minutes later when they all got sad again.
There was no big news story at 9:06am that I know of, and you expect me to believe that thousands of stocks just decided to take a synchronized dive for no reason? Do you know what that is? That some BS right there.
Note to newbies: if you went long at the open, congratulations; you are a card-carrying member of the dumb money. There you are getting all bullish after one of the greatest rallies in history. Hang your head in shame!
The pre-market action is thin. Any big bank or hedge fund, such as Goldman Sachs, can push the “buy everything” button to make the market look like it is going to “gap and go” from the open. Then six minutes after all the rubes are sucked in, they start dumping inventory on them.
Marty Chenard’s data at StockTiming.com don’t show that the big funds are in distribution (selling) yet, but Tuesday morning’s open makes me think that it won’t be long. Don’t forget, the big funds know that Marty is watching, and they will sneak in their selling any way they can. By time it shows up in the data, the correction is halfway done.
Maybe on Wednesday they will let the market rally a bit to smooth the ruffled feathers of the rubes so that they can fleece them again on Thursday or Friday. At some point, they will run out of suckers, and the market will just drop and flop from the open.