12/21/23 Overdue Selloff


Markets opened Wednesday’s session with little conviction from buyers or sellers.

As the afternoon wore on, the bears finally made a move, and the bulls didn’t put up a fight.

Image from Adobe Stock

The indexes plunged during the final hour and a half of trading, and all closed the day deep in the red.

  • Dow Jones -1.3%
  • Nasdaq -1.5%
  • S&P 500 -1.5%
  • Russell 2000 -1.9%

Sector Round Up

All 11 sectors ended Wednesday in the red also. Some fared better than others.

At the top…

  • Communication (XLC) -0.8%
  • Energy (XLE) -0.9%
  • Real Estate (XLRE) -1.3%

At the bottom…

  • Consumer Discretionary (XLY) -1.9%
  • Consumer Staples (XLP) -1.9%
  • Utilities (XLU) -2.0%


The Dow Jones has finally returned to earth after spending an unheard-of 19 days in overbought conditions.

DIA Daily Candles – Chart from thinkorswim

During the Dow’s time in overbought territory, it gained 7%.

You could have easily lost more than 20% if you took a leveraged short position.

This chart contains an important lesson. The signals we track are merely clues as to what is likely to come. Overbought (or oversold) conditions rarely signal a time to go short (or long). They act instead as an early warning and can indicate a good time to take profits.

Your latest readout…


This morning at 8:30, we’ll get the final Q3 GDP estimate. The first two estimates have been higher than anyone expected.

On Friday, PCE inflation data drops. 

After the close on Friday, we’ll go into a long weekend. Markets will reopen on Tuesday, December 26th.


*Low Float
^Open Position

*IMMX support at $6, resistance at $7
*OPFI support at $4, resistance at $4.50
*PLSE support at $11
*SHFS support at $1
ALXO support at $13
CRGX support at $17 / $18
FUSN support at $6
CENX support at $11, resistance at $12
LQDA on watch
ABSI support at $3, resistance at $3.50
ASPN support at $13
PRCH support at $2.25
SCS support at $13

Secondary watchlist—float about 100 million

ESPR support at $2
on watch
support at $20
MOR support at $9
NMRK support at $10
BVN on watch
S support at $26
LYFT support at $13, resistance at $16

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