{+++}All of the M&A activity, whether rumored or actual, was treated as a bullish sign as stocks climbed almost 1%. However, early participants showed their lack of conviction when the S&P 500 lost momentum upon hitting 1081, which marked the 50% retracement of its downturn from last week’s intraday high to last week’s intraday low. The final leg down made for the stock market’s lowest close in over one month.
We’ll see where we go from here but today was really sloppy action and the volume just seems to dry up more with every passing day. I don’t expect to see a big change on the volume front until the second or third week in Sept.
The financial sector continues to look horrible and it’s getting close to big support. JPM, WFC, BAC all appear to be rolling over.
We may see a turnaround Tuesday tomorrow as there is “bored” money (and a lot of it) out there. We need to watch the financials (XLF), because we wont get any real movement without that sector. I do believe that we will see a lethargic light volume chop for the next few weeks, so don’t expect too much from Mr. Market.
The SPX gapped up (never chase gaps) then failed, leading to a choppy day until the last thirty minutes when bids collapsed and the market just rolled over. The action was bearish, but it’s only Monday and as you all know, things can change in a hurry with this market.
The dollar was relatively strong and that didn’t help matters at all as the material sector was under some pressure. Oil started off the day on a good note but finally acquiesced to the overall pressure of the market.
Apple was under pressure and technology was mixed to down. 3Par received a higher bid today and the takeover game took a bit of a rest today. POT is in talks with others for possible higher bids, but MOS was a lone wolf and traded incredibly well today. The agricultural sector in my opinion is getting overbought, barring anymore humongous deals in that space. MOS specifically is up 50% from the lows that it made in early July. Same for CF and to a lesser degree AGU.
The inverse ETF”s may be the way to go again if we break. I speak of TZA, EDZ, DRV , SMN and FAZ. Still early because the possibility exists for a snapback rally that could be decent. BUT JUST IN CASE………………..
Here are some potential sort set ups:
