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The NASDAQ suffered its second largest loss of the year today and once again there was heavy volume distribution. That marks 6 of the last 11 sessions.
I feel like I am beating a dead horse, but the caution flags were waiving throughout April to take a defensive stance, raise stops, get into cash, and join the sidelines. I can only imagine the psychological warfare of, "the market will bottom soon, we will bounce back" throughout May. We've all been there, and it sucks.
The rest of the world is once again in focus and causing a ripple effect here in the US markets. From today's Reuters market recap, "Stocks fell on Monday as investors dealt with the one-two punch of worsening political upheaval in the euro zone and the possibility that China's economy may be softening more than previously thought."
Despite a 5th consecutive week of higher than expected initial jobs claims and Exxon's (XOM) miss, the market carried momentum from Wednesday and moved higher. Bespoke posted a good blog today citing the recent drop in bullish sentiment, arguably a contrarian sign for higher prices to come. The last time the reading fell this low the market was right near its 2011 bottom and we all know what happened after that.
The market had its first significant down session in quite some time, with the news outlets citing everything from China to Europe to the US debt as the primary cause. First up, a look at the intraday movement...
The NASDAQ breached 3000 intraday but then reversed alongside the market after Bernanke's testimony (WSJ breakdown, Bloomberg breakdown), which stated that QE3 was not in the immediate works, caused a broad sell off. Gold and Silver took a pounding, dropping over 5% (Bespoke analysis). Volume was also heavy across the board. Could this be the short term top bears have been waiting for?
