After a low-volume, oversold bounce that lasted two days, the bears are back. Not only did we have lousy breadth, volume increased to give us a clear day of distribution. Gold mining and agriculture managed some green, but all other major sectors were in the red.
There isn't any big mystery to what spooked the market. Weekly unemployment claims ticked up to the 500,000 level, and the Philly Fed had the worst reading in over a year. You can find various ways to explain that away, but you have to be fairly creative to spin that news positively.
The market has low volume and late-summer ennui working against in addition to the well-known inclination for seasonal weakness, especially in September. Good earnings are what held the market up in July and early August, but now the main news flow is economic numbers, and the best reaction we can hope for these days is "That number isn't so terrible."
The downtrend that started back in late April is still in place. We have had a series of failed bounces, and the one we had this week was particularly weak. We have some minor downside support coming into play, but there isn't much until we hit the lows of the year that we saw at the start of July.
We'll see if the bulls can pull something together here, but the technical conditions are working against them.