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No, not healthy at all. All the major indexes looked fairly horrible from the get go and things seemed to get heavier as the day progressed. Energy was particularly heavy as Light, sweet crude oil for July delivery declined $1.21 to end at $99.01 a barrel on the New York Mercantile Exchange. That was oil’s lowest close since May 23. Last week’s disappointing U.S. economic data prompted a tepid start to the week for most assets and renewed questions about global energy demand. OPEC also meeats Wednesday and you never know what will come out of that meeting so bids got hit. Energy is starting to almost get cheap enough for me to get long, but not yet.
There were a couple of break evens today, a few stops, and a few winners, but the market is nervous and set ups are becoming more elusive. The big question is whether we drive the nail down to the 1250 level or chop around a little more. A snap back rally may be in the works, so we need to stay ready. I thought that might come today, but I was wrong and got stopped on some longs.
XLF has broken all moving averages and XLE, XLB, XME and XHB may be on their way to their respective 200 day moving averages. Point is, we may not see a massive rally until those levels are hit, if we do rally before those levels are hit, we still may need to go back and test them. Bottom line, expect some chop and volatility over the short term.
The world isn’t coming to an end. This is a correction and this is inherently healthy for the market. We desperately needed prices to correct a bit.