Without any fresh news from Europe to fuel the fire today the markets sold off relentlessly as Q4 starts on a rough note. Volume was heavy across the board and the S&P 500 slumped in the closing minutes to end the session just under the infamous 1100 mark.
Closing under 1100 is a big psychological “woah” moment for the market which makes things interesting heading into tomorrow. Depending on what indicator you observe we are only slightly oversold at this time. And, given the drop off in early August, we know we are capable of much further sell pressure.
Cash was king for most of Q3 and remains king today. The combination of Europe constantly having to fix its band-aids alongside the US tilting back into a recession gives the market no base to move higher from.
Stay frosty (sharp) out there and I will see you tomorrow.
Tomorrow’s Economic calender:
Factory Orders @ 10 AM. Forecast -0.03%; Previous 2.4%.
Market analysis:
Apple has its big press conference tomorrow to announce what should be the iPhone 5. The stock is still a leader in this market despite its recent weakness. Let’s see if tomorrow’s news spurs a rebound.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Down | Down | Down |
| Intermediate | Down | Down | Down |
| Short-term | Down | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Thanks for sharing your thoughts. Brief but one of the best in blogsphere! Have been reading since the old TraderMike site.
Ditto.
Even more TA would be even better…
Thank you for supporting the site
I would love to post more charts, but unfortunately spare time is always an issue! For now I have to stick with the major indices and an occasional chart.
didn’t close below 1100, had a great flush down high volume scary gap down on nasty news out of Europe! then reversed, causing a huge short squeeze. I noticed all the stocks were getting hammered, it seemed too easy to be short, and it was…now I think we drift sideways as the market has priced in a Greek default it seems, and shorts are fat like a mosquito after a big meal and don’t want to give it back. Another good reason never to be on margin long, these poor people got wiped on this last 2 month drop.
My experience is that there are a ton of traders long on margin on very volatile stocks watching their account balance swing up and down and this last drop below on S&P 500 below 1100 had a lot of people selling because they couldn’t take the pain anymore (that or get a divorce), or margin calls forcing you out, only to watch in horror as it rallies almost 5% in 1 hour. Hey, this European bank contagion started in 2007 and has never been fixed, now it is threatening to bring down the whole banking system there as they know it, with only a few strong banks remaining solvent. Their liquidity will freeze up, banks don’t trust each other, heck in the old days there would be wars over this kind of stuff. Very hard to be long financials, Cramer says to stay away completely until many months from now, as everyone is shorting our American banks as a proxy for shorting European bank stocks, which is not allowed there. Actually, and perversely, there would be a huge relief rally IF a major bank failed in Europe, as everyone is lying right now to prevent a run on their banks (remember Lehman was doing “just fine” by their own CEO’s statements)…without a bank system failure or test of one, there is no transparency. And our American FED has committed to bailing out their entire Euro to prevent a worldwide banking collapse. So Geitner was over there recently putting pressure on the EU to get it over with, wall up the good banks, let the bad ones fail and get swallowed up by the good banks, and quit using band aids for a situation that requires amputation of the bad leg (Greece, and other EU losers)…
Interesting thoughts, and I see a lot of where you are coming from. I wonder though whether or not the market really has actually priced in a Greece default. Any hint of a fresh solution to saving Greece and the EU sparks a market rally. If Greece were to default tomorrow, Id be willing to go out on a limb and say the market would drop substantially because of the domino effect for Europe and real fears on a true resolution.