Now We're Down Again; Let's Blame Dimon

The market got into trouble today by testing the dip buyers once too often.

They have been doing a good job of jumping in every time we pulled back during the last few days; however, the more often we pulled back to support, the less likely that support was going to hold. They would simply run out of juice after a while.

The main catalyst for the breakdown this afternoon was probably comments made by JPMorgan CEO Jamie Dimon. His comment that credit deterioration was probably worse than expected scared off the dip buyers who just couldn't keep on buying the bad news.

The important thing now is that we find support. The key levels starting the day were the highs we hit last Friday following the "buy the bad jobs number" rally. For the S&P 500, that level was 879; and for the Nasdaq, it was 1510.

We ended up closing slightly under those levels and volume wasn't too heavy so it was not a decisive technical breakdown. The bulls can still rescue the situation, but they are gong to need the financial sector to start acting better. Weakness in banks is the big sore spot right now, and they are going to drag down other groups like retail and home builders.

Leadership today was in precious metals due to a weak dollar. The weak dollar was helping to drive oil higher as well, but that faded badly this afternoon. Bonds stayed strong and market players were also looking for some safety in pharmaceuticals and HMOs.

Overall, it was not a good day and we are now in precarious position. The biggest negative we probably have is that too many folks were thinking an end-of-the year rally was a slam dunk. We may still have one, but we need banks to start acting better here very soon.