The Dow is back red for the year to date and the S&P has joined it.
I suspect there may have been a "FUNDAMENTAL" reason for today's decline, the thing is once Wall St. is set on a move and has invested in it, even an intraday bounce, they usually see it through.
While it's impossible to tell, this would be one of those events the market couldn't or didn't discount and the very weak structure of the market is what causes all of the downside volatility.
My guess if I were to take one...
S&P sectors...
On the day, 8 of 9 S&P sectors closed red with only Energy closing green despite the horrible EIA inventories today. Crude got a lift from another fundamental event that wasn't discounted, the militants and proxy war in Yemen between Iran and Saudi Arabia as oil moved like this today...
This was largely a fundamental event, I suspect oil still comes down, either way with a half size position I would NOT chase it here, but wait for a pullback and lets see if it's really going to pullback or whether it may be better just to take whatever we can get at that point.
As mentioned, 8 of 9 S&P sectors closed red except energy on the Yemen news. Of the Morningstar groups, only 14 of 238 closed in the green, 224 closed red. This is what we would call a 1-day oversold event.
AAPL got whopped...
Biotechs didn't fare any better, shortly after Cramer reassured everyone that it would be ok, Biotechs
Over the last 3 days, biotechs have lost more than 12% on volume, interestingly we just started seeing something funny going on last week before this decline after a couple of months of staying out of the way...
Transports are down nearly 5% over the last 3-days as we have recently covered them and opened positions there as well.
The $USd lost some ground today while EUR/USD basically pegged in place and is offering the market some upside support along with other leading indicators.
One of those leading indicators on a very short term 1-day basis is yields which ,may have come undone today due to a weak 5 year treasury auction, or it may just be coincidence and they are simply ready to support a bounce. See yields in the Leading Indicators post from this afternoon.
It seems like stocks are near ready to catch dow to HY Credit's intermediate term trend.
I'd say the October lows are an easy first target, but once we break those, there's no coming back, we'll be well in to a primary bear market.
As mentioned we have a 1-day oversold condition between S&P sectors and Morningstar groups.
From a Price/Volume Relationship perspective, we finally have a Dominant Price/Volume Relationship between all of the averages , Russell 2000 included and that is Close Down/Volume Up with 24 of the 30 Dow stocks, , 84 of the NASDAQ 100, 1074 of the R2K and 292 of the SPX500 with less than half of the Dow and S&P stocks above their 50-day moving average (245 and 14 respectively).
Close Down/Volume Up is a strong 1-day oversold bias in the Dominant P/V. Taken with such heavy skewed losing sector performance, I see every reason to call this a 1-day oversold event and expect a bounce the next day. The question is, how much fear is in the market, how many carry trades are being unwound and how many margin calls are going out?
The best Tweet if the day from NANEX founder, Eric Hunsader
That's it for tonight, we'll see if the market can bounce here, it is well set up to do so, however if it fails, I would suspect we'll be looking at the October lows sooner than later although I think we'll be there soon either way.
Futures look similar to the earlier update, they are working on an intraday 1 min positive divegrence and they have a lot of support and a deeply oversold 1-day condition, if they can't bounce here, well... you know.
I'll check in later if there's anything going on in futures.
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