Some may say it's no big deal day as the market barely closed down 3 points. For those that were still chasing financial stocks in the mid-day, it just may not be a pretty close as the SPX dropped 769 to 754 off a downbeat Mastertrust credit card data from AXP triggering a possible turn we alerted. This was the possibility, we noted late last week to end the rally. We'll see what commentary this gets tomorrow. Most of the day this premise wasn’t cutting it because COF reported first and posted inline numbers and actually beat a few expectations, but other reports weren‘t as positive throughout day, most notably ending the day on a disappointing # from AXP. This was the perfect medicine to curb the high flying banks (BAC,C ) to set off an broad sell off as these names relate to the credit card picture. Now, we have some renewed concerns on the group into earnings (DFS eps Thur.) and this may rub the whole financial group the wrong way as we saw earlier in the year.
Well, what did they expect anyway if not a sell off sooner than later? Did some people think by getting into banks- brokers on the fifth day of run-up would net them another 20% return? Of course, we are dealing with a market that has a beast of an attitude right now, but enough is enough to this one-sided rally. The early weak signs were all over the place to suggest that we may not get a good close. Nasdaq stocks were weak at the get go and the best of breed in banks-brokers (GS,MS ) just never participated early in the day and all these were heavy into the close with the broad market. There was an influx off good money still coming from the latest so called safe havens to the high flying banks as we alerted in this 5th day of this rally, some seemed to think this would never stall out and chased. It probably seemed like that to many of us as well, a good degree of patience was required not to go with the herd in the late innings of this so called game-changer rally.
The AXP #, coupled with a very oversold market (3 day RSI over 90 (overbought signal), simply was the making for a big intraday swing. Market ran to SPX 775 today (right at circle on SPY chart from this weekend) from a low of SPX 666 or so just a few days ago. No matter if everything was positive going forward this kind of one sided rally at this pace is just unsustainable. In addition, we still haven't seen any positive action from the government in recent days to encourage this rally, it’s purely, better than expected earnings and subsided fear of nationalization thanks to the CEO’s of the banks-brokers. Technically, this market is due to a pullback, but we’re still not seeing new shorts because upside risks seem to outweigh downside ones at his point. Basically, the rally may not be dead, but the chart candle today suggests that we could be done with the up until we get more newsflow. It's only the first day of the week and we are hoping this market would settle down so traders can get some sensible trades in for the coming days off new newsflow, eg, gov’t and /or Eco’ data where the broader market participates, unlike, this recent over- crowded trade.