Sidelines..

Once again a rally (Friday) proved to be nothing more than short covering nonsense.   One positive is it still shows the shorts are on the edge of their seats ready to cover quickly, showing a lack of conviction on their parts.   Unfortunately,  a lack of conviction is prevalent on the buy side as well and we just continue to drip lower as no follow through buying is occurring.   The overnight SP cash high hit 785 and was not even tested in the morning after a positive pre- market tone dwindled quickly.    Simply, the market did not view the move off 754SPX as a true test and now all eyes are waiting to see how it handles these critical lows between 741- 752 going back to November.    Just like the rest of the market,  we can only sit and watch waiting for someone, somebody to take the lead into buying this SPX market that is down 6 straight days.    All technical’s are basically pointing to a rebound off oversold conditions,  but the newsflow is just not convincing anyone to chase the tape up as their is continued disappointments coming from D.C.    Despite actions of Citi/ BAC late last week,  the grave action in their prices is just not forcing the hand of Washington to do anything drastic.   All they do is reiterate or regurgitate news.   Saying you favor a private banking can only go so far.    It was exceptionally quiet from D.C over the weekend and the market didn’t like!.    Once again,  all Geitner is doing is reiterating what has been said,  now it’s a convert preferred stake into common of Citi hitting the wires today.   This has been part of any aid package discussed previously and the market reaction was muted.   The only thing that seems as a possibility for aggressive action is if whispers of a run on deposits start at these banks!.  This is seemingly the only thing that would drive drastic action from D.C!.

In brief,  just do what the market is doing is, sit on the sidelines and wait for market to react to a slip of 741.  Just like 754 wasn’t 752-750, the market didn’t do one thing or another at 742.   It probably wouldn’t do anything at 741, it would have to slide lower intraday to get any real reaction.  It’s not that the market is so picky and needs an exact reading, it’s just that it’s got no conviction to do anything either way.   There’s only one way to handle a test,  give it some news either way.   Example, if there is sufficient bad news overnight and we`d sit below 741 in the premarket,  if we bounced someime after the opening bell that would signal a true test and potential reversal.

As far individual equities- sectors weakness is seen throughout, even the green action in financials was very light.   The techs are still getting a whipping following HPQ`s report.  The big cap hardware’s were all down 4% or so, HPQ’ DELL, AAPL IBM etc.   Semi`s off 4% as well.   Huge downside moves Ag`s -Chems and Steels, metals is not offering a place to run as the $CRX broke its 2009 lows.  This $ CRX commod`index has been shaved about 25% in about 2 weeks.

The only stock doing anything worthwhile, NCH is GEOY  as it got final clearance to start getting revenue on the books.  GEOY, ``…this stock will make some headlines as soon as it clears some more regulatory hurdles in the future and comes on more screens`early Feb.