Although downside action immediately followed the BIG NEWS, we are in the process of stabilizing a bit as we work our way through the New York lunch hour. Selling does continue, however, sending us to fresh lows. With the KBW Bank Index down by more than 12%, there’s little question as to where most of the pain is being felt, but this terrible action we’re seeing is stretching to every corner of the market. Only materials is hovering above losses of 3% on the day while industrials and consumer discretionary are lower by more than 4%.
Of course, the media is blaming all of this on the fact that Secretary Geither was long on generalizations and short on actual facts, but we were set up for a “sell-the-news” reaction, and that’s exactly what we’re getting.
The problem, though, with the fact that we didn’t get any specifics whatsoever is that we will likely be relegated to having to deal with a market that continues to be held hostage to rumors and speculation as to how exactly the Administration plans on executing its plans. The market needed some clarity, and that’s just what we did not get. Time and price discovery, I guess.
As such, it’s going to be all that more difficult for this market to engineer a decent counter-trend move, especially when we continue to drift around without any clear leadership. We’re still above the lows from last month and are back at the middle of the recent lateral channel, but buyers are going to need to move beyond this and step back up to the plate relatively quickly. Hopefully this week...