The Dow Jones Transportation Average charts shown below provide some insight into significant trading activities prior to a decline. In the last quarter of 2021, when a large long tail candlestick appeared on November 2, 2021, it was observed that a significant number of very large block trades were crossing the tape around that period of time. This trading activity is also similar to what occurred as a steady stream of very large blocks appeared during late January 2023 and early February 2023 when a long tail candlestick appeared on February 2, 2023. In the past, smaller versions of long tail candlesticks appeared on May 19, 2008 and September 19, 2008 prior to a sharp decline in late 2008.
Based on the Dow Transport Average index timelines discussed above, S&P500 and NASDAQ descending triangles noted on February 9, 2023, very large block trades crossing the tape during periods when long tail candlesticks appear, plus “technical issues” for trades on over 200 stocks during the morning session on January 24, 2023, it appears that Market Makers are setting up a decline that could last well into 2023.
Stock chart courtesy of StockCharts.com.
