The Fuse Needs To Be Lit.....

If the market is going to correct after a big three-day move, then the action today was a good way to do it. We could have done without the very weak finish and breadth was pretty poor overall, with just gold in positive territory, but volume was extremely light and many of the best stocks held up relatively well. The bounce in bonds was a bit troubling, but it was mostly just boring and slow rather than a stampede for the exits.

The biggest problem this market faces right now is that there aren't many catalysts out there. The excuse for the selling today was increased worries about the levels of European debt. That sounds more like a convenient excuse rather than the driving force, but there just isn't much else competing for investors interest so they decided to focus on this convenient negative today.

We have the Beige Book report tomorrow afternoon, but the news agenda is very slow until next week. The problem with that is that market players look for excuses to make a move, and when nothing much is happening, it is often easier to find negatives.

Technically, the S&P 500 lost the 1,100 support level that it had reached on Friday, but it held well above the 1,080 50-day simple moving average that I see as the most important support in the near term. The Nasdaq and Russell 2000 are lagging the S&P 500 a bit, but both also managed to hold their 50-day support as well.

Overall, we are still in OK shape for a further upside push. We needed to consolidate and work off slightly overbought conditions, which we did today, but now we need to find support and entice the buyers back in. The biggest obstacle is that there just aren't a lot of great reasons to be jumping in right now when things are so slow.....