Looking at today's breadth indicators, there was certainly some improvement, but nothing worth mentioning as far as usefulness in trying to get some indication as to the market's intensions. Both were very much like the end of day 3C chats I posted, there were some slight improvements, but truthfully, not really worth mentioning as they were not strong enough to consider them as high probability in either direction.
The most significant indications are some of the longer term 3C charts which are bullish for a bounce and the strong dominant price / volume relationships of Friday.
Today started off very dull, much like trade during the summer doldrums. We saw a mid-day sell-off across all asset classes except for bonds, which ended up in most cases, being a false breakdown which ended sending most assets or at least the equity averages higher. This apparently on news from the WSJ that Bernanke considers the Dodd/Frank legislation to be confusing and he considers the financial markets to be OVER REGULATED. From about 2 p.m. through the close, we saw a slow, steady decline into a flag-type consolidation. The consolidation itself is bullish, but probably noticeable by the black box systems which would raise the possibility of a head fake around the bullish pattern.
All in all, after Friday's price/volume relationships, today was a boring disappointment. I have little doubt the continuing drama surrounding Greece had a lot to do with today's initial excitement when prices declined to break various intraday/daily support levels. Bernanke's sudden dovish tone toward the financial industry which started late last week is giving the market, especially financials, something to sink their teeth into.
The news that the S&P rating agency downgraded Greece to CCC "outlook negative" more or less coincided with broad weakness in the market which gave rise to several false breaks that later recovered as mentioned. The market averages mostly recovered. Financials not only recovered, but went on to post new intraday highs-financials may have been the brightest spot in the market today. Energy lifted off the lows, but did not recover to earlier strength. Technology as a whole, recovered to the unchanged level. The fact that there was a recovery in many assets after a sharp break of support and a pretty nasty sell-off I suppose is one more small victory, but nothing to take a victory lap over. Commodities as a group were disappointing in their post sell-off trade, they closed negative on the day (between -.75% and -1%) and this was in a weaker dollar environment.
On the subject of FX, the Euro showed surprising strength from 1-2 p.m. and closed green for regular US trading hours, up better then .50% which is interesting given the Greek situation.
Precious metals, specifically silver and gold both traded down on the Greek news and lingered near the lows for the rest of the day. Gold showed a little better relative strength during the decline, but again hardly worth noting. I found it interesting that gold didn't catch a bid in a flight to safety trade. This further reenforces my mid-term view that gold and more acutely, silver seem to be under pressure in what seems like intervention on some level.
Bonds were the only safe-haven flight I've seen today during the noon sell-off, but they gave up all of the gains in a nearly parabolic descent from 1 p.m. on. TLT (20+ year bond ETF) was in the green on the safe haven flight, but gave up all of the gains to close at a half percent loss. There were losses across the entire curve, with some minor relative strength in short dated issues of 1-3 years (note I said relative strength-not strength).
The top 10 sub-industry groups today with gains of 1% or more included: Textiles (apparel/clothing), Surety and Title Insurance, Confectioners (kind of odd?), Regional Mid-Atlantic Banks, Small Tools and Accessories, Toy and Hobby Stores, Sporting Goods, Recreational Goods, Electronics Stores and Office Supplies.
The top 10 worst performing sub-industry groups with losses of -1.73 to -3.95% (which are substantial losses considering these are groups of stocks) included: Radio Broadcasting, Tobacco Products, Silver, Non-Mettalic Mineral Mining, Oil & Gas Equipment and Services, Medical Practitioners, Manufactured Housing, Independent Oil and Gas, Auto Dealerships and Farm and Construction Machinery.
Currently in After Hours trade, all of the averages are trading up, above the breakout level for the consolidation flags I mentioned.
I suppose all in all, considering the trend of the last week and a half, today wasn't a disaster and it seems Bernanke is trying to lend some support to the market with 2 consecutive statements which are dovish on financial industry regulation. This should benefit the S&P the most and we see that with the SPY showing the biggest and longest positive divergence on a 1 hour chart.
I'll be back in a bit with some more after I've finished running scans and going through some charts.
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