Major markets fell on higher volume as Asian markets dragged US and European markets lower after the Bank of Japan decided to not extend the duration on its ultra-low-interest rates to banks. The dollar fell sharply against the yen. The markets initially recovered from their opening gap-down and turned back into the black early in the day in a bullish move, but by the close reversed sharply to close near their intra-day lows, a conversely very bearish move. This was very volatile action and may be more common as the indexes engage in a QE tug-of-war. The NASDAQ Composite distribution day count now stands at 5 distribution days. Odds are increasing that the current pullback may worsen. That said, quantitative easing is a tough one for bears to contend with as it has provided a floor for the general market in past corrections, especially in 2013, where corrections have been limited to less than 5%. Futures are up this morning but another downside reversal could be telling with respect to the potential for this market to make lower lows.
The Market Direction Model remains in cash until some discernible strength or weakness becomes clear.
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