Europe and Asia struggled overnight and into the early morning hours pushing US Equity futures lower. Fears over Greece and other European nations grew, but now fears over China’s growth crept into the minds of traders. At the 10am EST hour the market was handed positive economic news out of the ISM Mfg. report as well as Construction spending. Unfortunately for bulls, the party did not last very long as sellers took to the market just after the S&P 500 was able to clear the unchanged hurdle. Volume from the onset was higher across the board, but grew tremendously throughout the afternoon selling. Institutions were out in the market selling down their holdings of stock pushing the S&P 500 to a new 52 week low as well as a closing low. The NASDAQ narrowly escaped notching a new 52 week low, but the index appears to be in free-fall as well. We have been warning this market was dubious and cash was king today proved to us we are in lock step with this market.
Leaders continue to get hit hard in this stock market; even PCLN receiving an upgrade wasn’t able to hold onto its gains. ALXN a stock holding up was down almost 5% and HANS another was down nearly 9% in today’s trade. LULU, GMCR, TPX and many others continue to break down here signaling this market has much more to go on the downside before we can find any bottom. I’ll paraphrase Jesse Livermore: “prices are never too high to begin buying and never too low to begin selling.” Take your losses to live another day.
Financial stocks continue to take a beating from sellers. BAC slid under $6 a share over fears the bank may not be solvent. Whatever the reason is, they are selling down financials and its best to either be short and/or stand aside. The reasons may not be clear or known right now why they are selling, but don’t waste your time trying to figure out the reason. The action is telling you something is wrong and to do something about it. Reasoning will only slow you down, the price and volume action paints you a clear and objectionable picture. Use it to your advantage rather than wasting time on the why.
Cash remains king and will be king for the foreseeable future. Stay nimble and prudent.
