We were drifting and hitting new lows in the early afternoon when some surprise bank news temporarily spiked the market, but the bulls needed a closer and they had no one in the bullpen. The market rolled back over in the final hour of trading and concluded a poor day with a whimper.
Overall, it was a brutal week. The market sold off hard on Monday, struggled and failed to bounce on Tuesday and Wednesday, managed a poor bounce on Thursday and then resumed the downtrend and made a new low for the week today.
What was most notable about the action was how little underlying support there was. The dip-buyers, who couldn't get enough of this market for so long, completely disappeared. The usual chorus of bulls who proclaim all weakness is "a buying opportunity" was surprisingly quiet as well.
The catalyst for this weakness is painfully obvious. There are now major concerns that our already slow economic growth is slowing further and the jobs and real estate markets remain under substantial pressure. With QE2 coming to an end in the next couple weeks there is fear that we will no longer have the Fed to prop the market up endless with cheap funds.
So we have ugly fundamental news and poor pricing action. The end result is a down-trending market with no bounce to it. The market will be oversold enough for some sort of bounce but we better not lose sight of the bigger picture, which demands caution at this time.