10/27/2022M NEW UPTREND has Second Down Day butVolume was Lighter
>>> Heads up Warning: After great frustration when I found three different volumesfor the NYSE index on the IBD site today, I called MarketSmith. The new guy onthe after-hours help line said the market data systems are being updated withnew feeds. Please note:
· Market index prices appear correct and consistent. Smallvolume differences won’t throw me off, but today I have 2 significantly differentvolumes for the NYSE causing a down day to be a distribution day (indicating asell-off day) for one, and not a distribution day for the other.
I’msure IBD will get this worked out soon. (I suspect that managing multiple datafeeds is more complicated than any of us appreciate.)
Let’s agree the market IS in an Uptrend andwork from there.
Thursday’snews opened with a real shocker to me. I’d heard Meta Platforms was dropping today, but Meta’s price ended the day down 24.6% Thursday – in one day! Andthis is after a 66% drop from its all-time high a little over a year ago for a total 74.5% .. Yikes!
The cause of the price drop was a33% decline in earnings.
>>>>Let me point out why you should NOT have been caught in Meta’sThursday drop – why the market warned you of the likely coming drop:
First, note the blue arrow on theMeta chart pointing at the recent four red price bars (the blue arrow ispointing at those dropping price bars.) Now note the red arrow pointingat their corresponding tall red volume bars.
Even though the price did NOT drop ahuge amount over those 4 red (down) days, the volume of selling was huge! Andit grew with each new down day.
· On 10/21, the average volumewas about 27 million shares a day, the first of the 4 tall red volumebars on the char above. But the day’s actual volume was 46,3 million.That huge volume is what I call a “hint” that a whole lot of investors arestarting to exit the stock.
· On 3 of the next 4 days, the Meta volume grow by leaps!
o 10/21 46.3 million shares traded
o 10/22 63.6 million shares traded
o 10/23 38.4 million shares traded
o 10/24 89.3 million shares traded
o 10/25 232.3 million shares traded (after EPS announcement)
IMPORTANT LESSON: Those huge red volume bars were a warning that the many traders knew (suspected??) that the earnings announcement was going to be bad.
Did you getcaught holding Meta stock thought yesterday’s drop?
>>>Those high-volume down days bars were a big warning of bad news likely.That bad news hit today with a the 24.6% drop.
If you are holding onto Meta…. because it has dropped “too far to sell it now”…..Please remember, “It can always go lower…. if it is above zero.”
Wishing you, “Many Happy Returns,”
Charlotte Hudgin, The ArmchairInvestor