Wednesday, January 7, 2009

Rain Washed Out The Picnic

As is so often the case when folks are getting downright giddy over how the market is acting, we have a particularly ugly day. Volume could have been heavier, but otherwise there weren't many bright spots to be found. Breadth was terrible, with all major sectors down and the Dow Jones is almost exactly flat for the year after a strong start.

The indices were short-term overbought and then we had some bad news from Intel and Alcoa to spark the selling. When the dip buyers failed to gain upside traction intraday, the sellers took control and kept the pressure on. There was a late bounce once again to take us off the lows, but we still ended up with decent point losses.

Even with the loss today, we haven't done any great technical damage to the base that has been forming for the last five weeks or so. In fact, a pullback here is really what we need but holding support is the key. The buyers need to step up fairly soon or we risk some real trouble.

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