The big move on weak volume that we saw on Monday provided a weak foundation for the market, and we failed to see any notable follow-through today. We had a brief attempt at the open and then at midday, but we ended up with a weak finish and the indices in the red.
This is the first time since July that buyers failed to sustain their buying after a reversal. In July and in early September, once we pulled out of the pullback, we went straight up without a pause, so today is a slight change in character. The buyers aren't being as aggressive, and if we actually have a failed bounce, it will be an indication that a change in character is developing.
I don't want to be too fast to declare that the end is near. It is just one day of selling, and it was not that severe, however the key to this market for months has been dip-buyers, and they are now looking a little less energetic. The failure to immediately follow through after a big gain is notable in a market where chasing strength has been the only choice for so long.
We have economic data and Ben Bernanke coming up in the next few days, and with the end of the quarter upon us, there will be plenty of reasons for the bulls to really press to keep things going. If they show the same sort of weakness that we saw today, then we should be ready to very quickly take some defensive measures....