Stocks managed to shrug off a disappointing ADP employment report early in today’s trading session. The market was expecting to see roughly 65,000 jobs to be added in the private sector, but the report showed only 13,000 were added. Shrugging off the news was a positive sign, but as the morning wore on stocks struggled to gain much momentum as volume began to lag significantly. As the market hit new highs during the day bids seem to disappear showing an unwillingness to support higher prices in the market. It wasn’t until 2pm when sellers began to take over. Aided by a news release by S&P about reviewing Spain’s triple A rating was all the fuel sellers needed. The last thirty minutes was when selling accelerated into the close topping off the day with a very bearish signal.
After such a disastrous day on Tuesday one would have easily thought the market would be able to muster a half way decent “relief” rally. So much for “predicting” as the market continued its decline into the close all those who had wanted a bounce sold out. The way stocks have been moving is more of a sign of a lack of bids to the market. Without buyers stepping up to the plate willing to risk capital prices will naturally fall to where buyers will step in. At this rate, we will more than likely see much lower prices to come in the weeks to follow.
The remaining leadership that was keeping this market propped up have been beginning to fail. A few leaders have seen positive news that should have had their stocks move higher, but sellers used the good news as an excuse to sell the stock. When the last of the leadership fails the situation in the market becomes dire. Perhaps these stocks find support, but at this point with what we have in the market the probabilities are lower prices are in store for our leaders, or should we say “former” leaders.
An interesting development is the lack of fear showing up in the Equity put/call ratio. Once again calls out number puts with the equity put call finishing up at .60. Where is the fear? Especially after the free fall we have had in the last week. Does this surprise me, not really as many folks love to bottom fish and with sellers remaining complacent it is obvious why we can continue lower. Without fear of stocks never coming back it is terribly difficult to imagine any meaningful bottom will be put in place soon.
Jobless claims will be a hot topic for the business entertainers or how the industry calls them business journalists. Pay no attention to the talking heads, but pay attention to how the market reacts. Always keep your losses short.
Like I have mentioned over the past few weeks, cash remains king!
