Although a late-day squeeze helped the major indices recover about half of a percentage point in the last 30 minutes of the trading session, it was a pretty ugly day for the market. By the close, the indices finished with losses of a little more than 1%, and even though breadth improved somewhat, it was still a bearish 5:2 to the negative. Energy was the only sector to finish in the green, but even that group saw its share of pressure intraday.
That stated, both the Dow and the S&P 500 were able to avert more technical damage today (for those that believe), but they are looking rather precarious here, especially given the lack of volume associated with last week’s bounce. Last week there was plenty of talk about how the energy bubble was about to burst and investors were going to finally realize what a great value the financials were, the trends in both the XLE and the XLF remained firmly in place. We’ll see how things develop from here, but today’s session is a perfect reminder of how dangerous it can be to place bets based on compelling arguments rather than actual pricing action (again, for those that lean the technical way...).