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The major averages slipped modestly on Wednesday as the broader market followed the financial sector.
Financial stocks completely reversed a 1% loss in the going only to give up the move and finish with a 0.8% loss, which was largely the result of weakness in bank stocks.
Bank stocks had also undermined action in Europe, where Germany’s DAX dropped 0.5%, France’s CAC fell 0.7%, and Britain’s FTSE finished 0.2% lower.
With the financial sector unable to fight off sellers, the broader market faltered with the arrival of the final hour.
Resistance along the top end of recent trading ranges didn’t help the case for stocks. Even at their best levels of the day the major averages were hung up near the neutral line.
I’ve been scaling out for us on a daily basis and trying to add in some new names that look attractive, but I want to pullback as we approach the 1150 level without breaking through. We may break through, but if we don’t, I don’t want us to get caught leaning the wrong way. Preserving capital is infinitely more important than making it.
No new names tonight, but am starting to think Europe Part Deux may be coming. EWP I like as a short with a stop around $42. The U.S markets are so blinded by our rally that the focus on real potential problems have been pushed to the sidelines. Here is a great piece by fellow twitter colleague and ex Lehman trader Lawrence McDonald, author of “A Colossal Failure”. I agree 100% with his thinking. Here is the article.
Have a great night.