Friday, October 2, 2009
Still No Demand to Buy Stocks Despite Big Mid-day Rally; October 2, 2009
Despite today's big rally after the opening bell today, internals' data tell us it was done on weak breadth and volume suggesting it was only a few areas making a recovery from yesterday's broad based selloff. As you can see from the above snapshot from Scottrade, NYSE and S&P internals were solidly weak and showed no real signs of strong demand for stocks. The dollar weakened early this morning which fueled a lot of the commodity related assets to rise and banks rallied most of the day seeing as that they dropped the biggest yesterday (4.5%). So a broad based across the board selloff yesterday was met with some cherry picking and rallying on dollar weakness today, which in the end resulted in another mild selloff into the close today, making all major indices closing down for the day, with the S&P and Nasdaq Composite getting the worst of it, and the XLF (financial ETF) closed almost flat. So today's action was very bearish.
The market remains bearish, and barring some slight rallying (although not required), I expect this market to charge lower and start testing that trendline resistant at the S&P 1005 soon.