After the ugly action yesterday, market players struggled to put together a bounce today. A very poor reaction to earnings from FFIV helped to keep sentiment negative, and small-caps, in particular were pretty lifeless. Breadth improved during the day, but the Nasdaq was still solidly negative, with 740 gainers to 1,920 decliners.
The big question now is whether some good earnings reports can restore the bulls' vigor. Unfortunately, once a major stock like AAPL has a sell-the-news reaction to a good report, there is a greater inclination to do the same to other good reports.
We have another good test hitting right now. GOOG just put up some very good numbers, and the stock initially was up about 25 points, but it is now up about 3. The report looks very good with a big beat and good growth in paid clicks, but this market is still very extended on a technical basis, and that is going to be tough to overcome no matter how good the numbers might be.
We definitely have had some change in the character of the market action, but this market has a history of shrugging off these selling flurries pretty easily. We'll see what they do with Google tomorrow. If it can hold up better than Apple, that will help us build some support, but if the sellers don't relent, this correction is likely to gain some traction.