Wednesday, May 7, 2008

today's ugly action

bad day, as investors/traders apparently were caught off guard by a reversal. although there didn't appear to be any particular catalyst, the broader market sold off rather sharply mid-afternoon after muddling through what was looking to be a rather boring and lackluster session. even the materials and energy sectors, which had been once again showing relative strength, wasn’t immune. however, it was the financials that saw the most damage, with the XLF shedding almost 4% with only 4 of its 95 components finishing in the green.

looks like the dip buyers simply decided to take the day off, and the speculative money was nowhere to be found. perhaps it was the record high oil prices, which showed no signs of slowing down despite a bearish inventory report earlier in the day, but the market has done a remarkable job of shaking off higher energy costs for quite some time now. it’s hard to imagine that at some point, it won’t take its toll.

whatever the reason, this market was probably due for some selling, and today happened to be the day. the big question in my mind is if this will turn into something more or if buyers will step up like they have since the bsc collapse and allow the averages to put in another higher low (for those that believe in that). let's see how it unfolds, but i wouldn't be surprised at more downside here in the near-term.

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