Putting aside the fact that it was massively ugly, there are two notable things about Thursday's action.
First, it was a classic failed bounce. Exactly the sort of technical action you would expect after the early August collapse and the recent low-volume bounce. This is how a market acts when overhead resistance matters.
I don’t know how many times in the last two years we have had these V-shaped recoveries after a pullback. A lot of folks were counting on that to happen again, and it helped to make the action today even worse. Suddenly, the folks who had proclaimed that the worst was over found themselves leaning the wrong way.
The other notable thing was how lopsided the breadth was. Obviously, you don’t expect to see much green with a giant point loss like this, but nothing was left unscathed by this action. A little more than 400 stocks were up on the day, and most of those were defensive names.
