No conviction..yet
Tuesday, November 3, 2009 at 07:47AM On numerous occasions on pullbacks (corrections), we’ve said Bulls wait for things to settle down before giving the market an underlying bid and buying with conviction. This is especially true after big down days and today was no different after the market drubbing (Friday). Despite positive China PMI, Ford earnings Housing and notably an encouraging ISM# in the employment index that hinted at an upside to this weeks NFP#, the early rally was nothing more than short covering. Even with a weaker USD, the move waned quickly and proceeded to new short term SPX lows before a late afternoon bounce. Late move had same characteristics, nothing special. Still, the selling pressure from late last week seemed to have slowed for now, but with volatility back this may not appear as it seems.
Today, the lack of buyer / sellers simply showed the market is waiting for the macro eco picture to make any commitments to the market, (FOMC, retail sales NFP report etc). In the meantime, the market has internal problems, last week the XLF was down 7% and showed no life again. This time C weakness dragged on the group and TRAN SOX keep underperforming.
No conviction, no new buying into this market is what we're sticking to for now. Some downside momentum may have been lost. Be ready for signs of buyers for a trade on any retests of ~1029 today's lows / ~1027 low ES tests or next level support ~1021, buy stops should kick on break of todays high.