Well we finally got some follow through, although I suspect it was in the opposite direction than most people wanted to see. And that's exactly why I think it's necessary for the market to break down. There's still a good amount of complacency that needs to be wiped out. (Easy for me to say as I sit on a pile of cash.)
There was a lot of technical damage done today as some indices hit 4 month lows and other broke important moving averages. If you have a subscription to Briefing.com check out today's 'Swing Trader' column for some charts of several sectors. Below are charts of two of the sectors that stood out to me -- Banking and Basic Materials, which has been one of the strongest groups this year:
I have to second this advice that was made in today's Swing Trader column at Briefing.com:
As I mentioned yesterday, the ideal goal this week is to preserve capital by trading less and maintaining tight stops. The market remains oversold off its March highs yet many sectors continue to breakdown to multi-week lows. No reason to be a hero right now...let the panic selling take its course and hope the bulls make an appearance around the 200-day moving averages as the first quarter of the year wraps up.
That 200 DMA on the S&P 500 looks like it wants to be hit. That scenario makes a lot of sense and perhaps earnings, which begin next week, will be a catalyst to get the market out of its current funk.... Or not. :-)
