Selling pressure from the financial sector weighed on the market all day. GE added to the pressure and a poor finish when investors sold into what seemed to be fairly positive guidance.
The market did a pretty good job earlier on of shrugging off the dollar's strength, but eventually gold and some of the other commodities started to pull back. On the other hand, oil held up, but the specter of higher gasoline prices probably put some pressure on retail, which was quite weak.
The most important action right now is in the financial sector. It certainly sounds positive that big banks are weaning themselves from government support by repaying their TARP funds, but the banks need to raise huge amounts of capital to do so, and those secondary offerings are sucking up large amounts of liquidity.
In addition to the poor action in financials, the biggest problem for the market is a lack of leadership. We have some minor action in narrow groups, such as solar energy, home health care or fertilizers, but there were some nasty reversals in small caps. In particular, I saw a lot of China names reverse hard.....
The paucity of upside momentum, coupled with weak action in financials, makes for a poor trading environment. Tomorrow afternoon, we have the FOMC interest-rate announcement, which will further complicate a market that is acting rather randomly.
The overall technical picture still isn't bad. We are in a trading range, and that tends to lead to some healthy chart setups. We just have to wait until this market finds a catalyst and starts to trend again. The Fed announcement tomorrow may be a good candidate......
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