The market drifted lower today with the S&P500 matching its biggest range to the downside (10 points) in 12 trading days. SPX also traded below its prior 4 day’s lows, the first time it has done that since January 30th, and only the 3rd time so far this year. In each of the other two instances, SPX managed to put in a higher low the next day. So while the bears may have won the proverbial battle today, the bulls are still winning the war and we expect that to continue.
That’s not to say there isn’t more downside in store for the market. We just expect any downside to be more reminiscent of an ice cub melting. Today was a good example, you know the market is in a strong uptrend when the VIX climbs over 7% yet is still below 20 and the Dow couldn’t even fall by 100 points. However, the one sector that did take it on the chin today was technology.
QQQ suffered its biggest down day of the year. This is worth noting in particular because QQQ has been a real market leader. As opposed to the Dow or S&P500, QQQ (representing the NASDAQ) is the one index that was able to bust past its post recovery high, trading to a decade high last week. So with QQQ pulling back it could be a sign that more downside in the other indexes lies ahead.
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- SH @ the close 11/17/2011: Bears win the battle but not yet the war
- SH @ the close 3/23/12: Market loses weekly battle, still winning the war
- SH @ the close 10/18/2011: Buy the dips proves true again; bears get smacked
- SH @ the bell 9/30/2011: Bulls & Bears battling for upper hand as quarter draws to a close
- Stockhaven @ the bell 8/2/2011: Dow on worst losing streak in 13 months