Jobless claims failed to help drive the market higher as fears over Europe continued to weigh heavily on the minds of traders. Selling was intense and unforgiving thoughout the trading session. Institutions were busy once again dumping stock as volume was much larger than yesterday’s inflated levels. Oversold levels remained and did not provide any relief. By the time the final hour approached there was little buying left and the lows of the day were set. We have been warning this market was beat and due for heavy volume selling. Cash remains king and staying away from the long side of the market is the prudent thing to do.
I don’t think it is a secret we have been quite negative on the market for quite some time. It isn’t we are bearish on the United States, but we are well aware of when the market so signs of weakness we want to get out of the way. The late June and early July rally was a big tell. Volume was lacking and leadership didn’t see the necessary volume to point towards a sustainable rally. Sure, we went long the rally and took our profits, but we weren’t about to marry the long side without serious accumulation in the leaders. Market leaders are always the big tell in the market. Without them, we cannot have a sustained rally.
Tomorrow’s job report will be the climax of all economic reports this week. We have see very weak numbers out of the ISM manufacturing survey and non-manufacturing survey. GDP last week is hinting at another recession around the corner. This doesn’t mean we believe 100% there will be a new recession, but given the most recent reports it is highly probable. Again, paying attention to market leaders and their price and volume action is paramount.
Any bounce will be violent and more than likely bring us back to the death cross we are about to see. At this point, any short term bottom and insuing rally will be sold into. It will take a LONG TIME before we are able to repair the damage over the past few days. Cash is king and we are stalking shorts. For now, do not be a hero. You will only be chopped up by this market. If today wasn’t proof enough, you will pay with giving your capital back to the market.
Enjoy the weekend!
