Last week speculation here was SP1295-1300 would be visited prior to Bernanke’s address. It has come to fruition and more as a buyers strike has set in allowing for an easy trip to 1284SP equalling approximately a 7% decline peak to trough and YTD return just over 2%.
Today was almost an identical trading pattern to Friday’s,(early morning weakness, short covering bounce into lunch and a steep fall late in the afternoon). This is proof of a buyers strike as the market weakens after the initial short covering fades and lack of buyers doesn’t allow for follow through. This lack of buyers is the clear obstacle for the market preventing a decent reversal bounce, but it has played straight into the Bernanke comments, which may be a sentiment driver to ease longs concerns and scare shorts enough prior to create some upside action. How long it lasts afterwards is anyone’s guess at this point, but a short relief rally is likely in sight if buyers start picking at beat up groups ie. Banks to get things going.