All signs today of a market grappling with ramifications of no massive QE ahead and if economic recovery can survive without it. NFP# gaining more importance by the hour. In the meantime today, market was full of excuses to do some profit taking using incremental news; ie, such as making China growth outlook announcement sound like a negative surprise, which it wasn’t it as consensus was already @7.5%. In this view, it wasn't a material market driver heading into the week note and still isn't despite the market noise it supposedly provoked. Basic resources/base metals losses started in Europe and expanded in most ‘economically sensitive’ sectors in U.S markets. Do note, Nat.gas had a hand in crushing coal stocks and downgrades to Ferts’ made the casualty list grow in commodity land, so it wasn't pure 'China' news. Non-Manufacturing global services PMI’s (excluding US that came in better), were more of the ‘digestion' of a few months gains as discussed recently with softer eco’ data out, so not a surprise here.
A ‘healthy’ pullback was the hope last week heading into the NFP#, but a head fake took place with Thursday’s upside reversal. A few days later and now a 2 day/~20SP drop off '12 highs at today's intraday lows. The RUT breakdown gave shorts some confidence and today, it was go after the next similar ‘technically’ susceptible group. (SOX off ~2.55%). Also, noted the possible sell AAPL on the news as one highlight between here and NFP# got underway early, adding to negativity as it’s responsible for something like ~12-15% of the SP gains this year.
In all, at day’s lows market was still ~10 points off real ‘support’ levels (SP 1348-1350) with small caps(RUT) the only green as it bounced near 50ma. SOX will test area next. To put the downside into perspective so far, the drop off recent highs is still like 13 points shy of this year’s biggest/longest pullback back in January and that 3 day event hardly put a dent in the market. This dip is hardly a shallow pullback so far and definitely not a ‘healthy’ one at this point. Only difference is dip buyers are a little more hesitant to step up the last few days as Dec.channel breaks/ 20ma come into play. DJIA reversed and SP ticked off 20MA/ lower channel support due to rotation into safer groups away from beta. The NFP# hype should bring in some buying soon. All in, if excuses and not true market drivers are cited for falls, it usually is reversed quite quickly.