On the back of the Libya news stocks jumped higher out of the gate, jumping as high as two percent. A better than expected, but still negative reading from Chicago Fed did help boost stocks at the open. Sellers took control at the open as the market could not even hold opening prices. Gold prices did not join in the roll over and continued to move higher. A noon rally was able to recover about half of the day’s losses, but sellers took over once again pushing stocks back to the lows. Leading to the lows were Small Cap stocks and financial stocks. Once again, the stock market continues to act like it wants to go lower and today’s action was another signal this downtrend still has legs.
Our top leaders list went from 15 names to TWO names from last week’s action. We do not want to see this situation with more leaders getting knocked off. More and more leaders are being placed into the waste bucket as this market continues to push forward. Just because we don’t have leaders now it DOES NOT mean we will never see a good one ever again. In the future we will see new leaders form and breakout of solid bases. Until we begin seeing these types of leaders emerging, any rally will not last.
Banks continue to look terrible. BAC and GS are looking like they are insolvent and ready to pass “GO” and head straight for bankruptcy court. There are plenty of reasons why the banks are in trouble, one could be they still hold toxic assets from the Real Estate boom and bust. Regardless of the reason why they are going down, they are going down. Banks are toxic at the moment and are pricing in further pain for investors who are long. Avoid banks at all costs
This market action is certainly pricing in something, certainly economic pain for the global economy. If we avoided kicking the proverbial can down the road at every crossroad we could be on our way to prosperity. Unfortunately, we tend to not want to deal with our issues and let someone else take care of them. Cash is king and there are plenty of opportunities on the short side. Once these storm clouds clear and we get new leaders we’ll change our stance. For now, cash is king!
