After the vigorous intraday recovery on Tuesday, the market was poised for some follow-through today. We had a pretty good start this morning, but the buyers were unable to generate sufficient momentum, and we fizzled out in the last couple of hours of trading. AAPL was up over 6; it finished down about 1. Very, very frustrating.
A failed bounce is what you'd expect to see when the market is correcting, but I'm a bit surprised that the bulls didn't make a better effort. I thought we'd suck in more bulls before we saw red in the indices again.
The good news is that despite the negative close, we ended up with positive breadth of about 3,425 gainers to 2,350 decliners, with oil and commodity plays leading. Retailers and regional banks were the primary laggards today. Retail, in particular, looks like it is cracking.
There isn't any great mystery about what the excuse is for the selling pressure; helped greatly by our market's structural collapse. The market's broken; just a few million dollars of no position limit futures can bring down a cash market supposedly worth over a trillion dollars. The economic issues in Europe continue to fester. There just isn't much clarity there, and market players are going to stand aside until there is.
Technically, we were oversold enough to justify a bounce toward 1100 on the S&P500, but, instead, we now we are right in the middle of a little trading range, with 1090 the top and 1040 the bottom.
The bottom line right now is that we are in a downtrend. We have had a few oversold bounce attempts that have failed, and we can't be at all confident that the market has bottomed. Fundamental conditions have changed with the European issues, and there doesn't seem to be any quick or easy resolution on the way.
long AAPL
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