After the beating on Monday, the market was badly oversold and primed for some sort of bounce. We just needed a good excuse, and we had appearances by both Ben Bernanke and Tim Geithner to help provide one. Alas, neither had anything much new to say, and the market stumbled about and was unable to put anything together on the positive side.
What was really disappointing was the feebleness of the upside attempt. We never were able to get much going before we rolled back over. Breadth was OK, but regional banks and retailers struggled while oil and biotechnology showed some minor relative strength.
Possibly the worst thing we can have happen at this point is just a weak bounce or some churning that works off the oversold conditions and leaves the market teetering at support. That is exactly what it looks like is happening. If the bulls can't show more confidence, we can quite easily suffer another leg down - maybe a big leg down.
This is one very sick market, and comments out of the Obama administration about the irrelevency of Wall Street aren't helping. I can't ever recall a period when the downside has been so relentless. Anyone trying to be aggressive for a bounce has been hurt, and I'm sure the bulls are extremely gun-shy now. We just have to respect the reality of this poor market and stay vigilant.
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