Friday definitely was not a good day. SPY and DIA challenging the 20-week EMA, IWM was now a bit below the 20-week EMA, only QQQQ is still ahead of the 20-week EMA. They all fell with large volume. I think in the meantime trend is turning a bit negative based on the following:
1. only stocks with very very good earnings expectation raised went up, all the rest fell
2. just a little bad news can create a large drop with hugh volume, meaning people rush to the exit
3. some days ago when investors saw bad statistics, market did not go down as they believe bad news can trigger the FED to reduce rate further, but now it looks like investor believe that the problem could be bigger than they originally think that now even FED reduces the rate may not help
4. market did receive bad news from the credit market when big banks need to report big write offs
So in the meantime the market is in the mode of "drop with bad news with hugh volume", meaning that this drop will not end in a short term of period.
Under this kind of circumstances, stay on the sideline is a very good strategy. Unless you know a company really well that you believe your fundamental analysis and find a good entry price.
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