The broad markets produced a gap up and than what can only be called a 'negative' reversal day. You can't slice it any other way, a strong open which saw DJIA up more than 240+pt at one point and close 27pts down is just ugly. This type of action simply shows there was not a sufficient amount of buyers to sustain the initial move up. Maybe, it was it too much to expect that a level of buyers necessary to sustain any move would all of a sudden come out on the first trading day following summer vacations. If this wasn't ugly enough, it was even uglier on the sector/ group watch as the biggest downside was on the energy and materials groups. The best trade possibility noted Thursday of going short the energy sec.(or at least selling out before) over the weekend if the hurricane did not live up to worst case scenario, played out. If all things come in 3's, we should have remembered what we have seen seen the last 2 months and that is huge sell-offs in commodities in the beginning of a new month and played that into the weekend. Unfortunately, we did nothing, we don't bet against a potential wrath from mother nature or bet that all things come in 3's.! .
Does this action mean we are heading back to July 15th times?. As long as the Discretionary stocks hold up, probably not....but, it does look as if traders/ investors may just be exhausted and have left not only for the summer, but are out all together for the rest of 2008!. We discussed this possibility last week that the volume may just not return as expected come every September this time around. Since one day is not enough to make this possibility come to fruition, we'll continue to wait it out.
It's back to the drawing board as we said yesterday to start the Q, but after yesterday it just got muddier!.