We started the day with an oversold market that looked like it might be ready to bounce a little, especially with the endless hype over the General Motors IPO. However, the bulls never were able to gain any real traction, and a boring day turned ugly in the final hour. An early earnings release by NTAP with some poor numbers was all that was needed to tip us into the red. We did manage to recover a little in the last 30 minutes of trading, but it definitely was no big victory for the bulls.
We are still technically oversold, although less so after the flat action today, but the General Motors deal is going to set the tone tomorrow. I'm a bit concerned that there is just too much optimism about the offering, and I wouldn't be at all surprised to see it hit its high of the day shortly after opening. The underwriters will give it plenty of support at the offering price, but an IPO of this size is going to have a lot of players who are happy to flip some shares for a quick gain. Of course, all the folks who are getting an allocation love it right now, but we'll see how willing they are to sell on a strong open.
It is troubling that a market as oversold as this one couldn't manage a better bounce. The dip-buyers sure left town in a hurry, and they aren't in a big rush to jump back in. Tomorrow we will see if endless news coverage of General Motors can shift the tide and maybe entice some buyers back in, but I wouldn't be overly bullish, even if we do have a positive day.
Keep in mind the big picture. The market is in a downtrend and struggling to produce an oversold bounce.