Although the major indices were able to finish off the lows of the day and close in mixed territory, it was by no means a healthy day for the market. Breadth ended at about 2:1 to the negative, and although the DIA and the SPY finished in the green, it was on lighter volume, while the QQQQ lost ground on higher volume. The financials, as measured by the XLF, closed at the lowest level in over 5 years, but the weakness in that area was offset by strength in materials and energy, which led during the day despite a pullback in oil.
That leader/laggard relationship told the story in the Dow, where AA, MCD, XOM, CVX and WMT accounted for about 85 points to the plus side while JPM, BAC, AXP, C and AIG were responsible for about 40 points on the minus side. There was plenty of underlying weakness today, and the takeaway is that the action is deteriorating and the averages are once again trending lower on a short-term basis. We may be set for a bounce here pretty soon, but we need to keep this recent series of lower lows and highs in mind as we contemplate how we will approach the market as we move forward.