Remember how we wrote last week how the DJIA had a streak of 60+ consecutive days without a 1% loss; the longest such period in years? Well that particular streak continues as that index only fell 0.75% today, but the other major indexes all took much more significant hits. The S&P 500 dropped 1.05% (worst drop since late June), the NASDAQ 1.36%, and the Russell 2000 (small cap oriented) fell nearly 1.5%. This was definitely the largest selling pressure seen in a few months, and marked a clear "distribution day" for those who follow the Investor Business Daily methodology. Having one or two such days in a few week period is ok, but once they begin to stack up it signals institutional type selling.
Ironically, today was a day of relatively positive economic news with both consumer confidence reports and regional Fed surveys showing better than expected data. Markets were higher in the morning, but as the day progressed selling pressure increased. Google (GOOG) hit an all time high before reversing sharply and finishing near its lows; the stock is quite overbought.
Broadly speaking there remains major issues in semiconductors and transports - both areas that should be leading rather than lagging if the market was rising for fundamental reasons.
Oil continues to be weak, which in theory should help transports (as fuel is a major cost) but not so much.
After a quite overbought reading a week ago Friday, the NYSE Oscillator is now in negative territory.
As for the indexes, the S&P 500 after levitating 7 sessions over the ascending channel it had been traveling since early June has fallen back into said channel and indeed is almost at the midway point of it. However this sharp move down has taken back almost all of the "QE3" gains and erased most of the upside candle created on the Thursday of the Fed announcement. For bulls holding the top 1/2 to 1/3rd of that candlestick would have been more positive.
The NASDAQ has broken its bull flag for the first time in four flags today:
Over in Spain, it looks like austerity is not going over well as protests similar to what was seen in Greece the past few years are developing.
- More than 1,000 riot police blocked off access to the Parliament building in the heart of Madrid, forcing most protesters to crowd nearby avenues and shutting down traffic at the height of the evening rush hour. Police used batons to push back some protesters at the front of the march attended by an estimated 6,000 people. The demonstration, organized with an "Occupy Congress" slogan, drew protesters from all walks of life weary of nine straight months of painful economic austerity measures imposed by Prime Minister Mariano Rajoy and his solid majority of lawmakers.