The market hates uncertainty and right now we’re hip deep in it. Tomahawk missiles will be flying soon, Congress is back from vacation so they will do what they do best which is never good, It looks like Summers will be announced as the new Fed chair soon, but he’s not as “dovey” as Yellen would be. Oh, and we still have this non productive chatter about tapering which does nothing but breed angst in the hearts and minds of market players. It’s also August and volumes are printing year lows, so moves are more extreme and look bigger than they are.
I’ve been saying that the Dow Jones looks sickly and still does. It’s hard for the market to fight the good fight when there’s so much uncertainty right now, and if the $DJIA doesn’t get its act together, and soon, we run the risk of that index pulling down the other indexes which are trying to rally.
About two hundred to two hundred and fifty points of the recent Dow decline was due to three stocks: $IBM, $XOM and $CVX. So its not like breadth was big, but it would help of those three stocks can find bottoms and rally. Their charts still look bad.
I’m still not sure that its really of a market in correction as it is a market in rotation. Yesterday biotech stormed back as $IBB rose 4 bucks and stocks like $AMGN and $CELG had nice pops.
Try to stay with what’s working, but it’s probably best here to do nothing at all.
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