Stocks did just what we expected them to do today – go lower. The S&P500 failed to extend its winning streak to 3, something that should come as no surprise to our readers. On Friday we noted the following:
“SPX has only been able to string together one 3 day winning streak since October 29th, from 11/28-11/30. During the uptrend off of 1,075 SPX managed 4 such streaks. Given this statistic, if the market is able to close higher again tomorrow then we recommend getting short going into the weekend. Why? Because the odds are in our favor.”
The action today provides us with confidence that the downtrend and bad price momentum is very much in tact. Commodities were weak again today, with all but oil trading in the red. The Euro was down as well and the dollar up. In addition the 10 year Italian bond rose 3.5% to its highest level since late November. Technically, the S&P500 broke below last weeks low of 1,209. Add up all of these factors and you get another bearish day today for the U.S. markets.
Highlighting the weakness today was Bank of America (BAC). BAC traded down to its lowest level since March 2009 today and the chart looks completely broken. The breakdown below the psychologically important $5 level seemed to drag down the entire financial sector. Goldman Sachs (GS) traded down accompanied BAC in trading down to its lowest levels since March of ’09 as well. This is really quite scary when you consider the leadership role that financials seem to take in the market place. The fact that financials are retesting their 2009 levels could bode ill for the markets overall.
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- SH @ the close 9/1/2011: Markets close lower ahead of Friday’s jobs report
- SH @ the close 9/13/2011: Stocks drift higher in uneventful trading
- SH @ the close 10/28/2011: Markets take a breather; SPX up for 5th week in a row
- SH @ the close 9/26/2011: Markets surge higher on oversold rally
- Stockhaven @ the close 8/3/2011: Roller coaster day ends green for markets