After a very ugly morning, the buyers managed to bounce the market a little this afternoon -- but they did so in very lethargic fashion. Breadth was better than 4-to-1 negative and the small-caps were particularly weak. A big move in heavyweight AAPL helped to cover up quite a bit of weakness, but for the most part big-cap momentum names acted poorly as well.
There is no big secret as to what is happening here. Market players are worried about the debt issues in Europe and the debt ceiling negotiations in the US. In addition, GS stirred up worries about a double-dip recession again.
The million-dollar question right now is whether earnings can help to turn sentiment positive again. GOOG helped a little on Friday, but IBM just reported and the stock is doing nothing. So you have to wonder what Apple is going to do tomorrow night being as the stock has already made such a huge move into its report. We will need to hear some better-than-expected news as well as some positive comments from management about its business prospects. At the moment, market players just don't seem to think that is going to happen.
The good news is that it is awfully gloomy out there, which means that folks are going to be well positioned if we do see some upside movement. That can help to produce a sharp move, but the bigger picture is definitely mixed. The market is back below the 50-day simple moving average, but there is some support. It is not an illogical spot for the market to hold but it will need some help from the news flow.
The environment is very muddled.