It was another very slow day of action, but we did manage to bounce a little this afternoon, and that did ease the losses a bit. Technology stocks led, and that helped the Nasdaq to outperform, but oil and financials struggled, and that helped to hold things down. Volume did pick up, but that was mostly a function of option expiry.
Technically, we did manage to close above the August lows, but the major indices are not in a very good spot. There is plenty of overhead resistance to deal with, such as the 50-day simple moving average of the S&P 500 at 1089, and there isn't much underlying support.
The biggest problem we face is that the economic news just hasn't been very good lately, and we don't seem to have fully discounted that. Next week we have existing-home sales, durable goods and revised GDP. There is little optimism about those reports, but the market doesn't seem to fully reflect the growing concern over a double-dip recession.
We have some chasing of stocks that look fairly extended, such as CRM, INTU, FFIV, JKS, AKAM and VMW, but the majority of stocks are doing absolutely nothing.
Next week the action is likely to remain drifty and random, so you don't want to be too dogmatic in your market view. This has been a very tough market for stock-picking but that is what you have to do if you wish to stay active when we have such light volume. After Labor Day volume will pick up, but keep in mind that September is historically a very difficult month.