A Constructive Day

 | Apr 14, 2014 | 6:46 PM EDT
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This session answered some questions. We have all been around long enough to know that you can't get the kind of lift that we had unless a big sell program ends. We don't know whether the program was forced upon us -- a de-risking attempt to lower exposure long and short -- or whether it was all about a margin call. Either way, it was so stark and transparent as to make us realize that there may be less fundamentally wrong than we may have believed.

We also have to recognize that part of the problem has to do with high-frequency trading, part of it is the Jewish holiday, and part of it is a lack of liquidity, which could enable a couple of people pressing the biotech index (BTK) and a some mindless tech ETFs into oblivion.

It usually isn't as clear as it was today. Just to reconstruct, the market looked terrific for the morning, but cracks appeared at midday, notably in the beleaguered biotech, social media and cloud plays. A normal seller would deftly offer stock into the rally. But once it was clear that there wasn't a lot underneath -- no real bids -- the sellers pressed. That's usually a sign of a motivated seller who has to get done. That kind of seller is often besieged by shorts, too, who don't know when the seller is done. You get that vacuum back up like we had at 3:30, when the seller is finished and the short-sellers have nothing to shoot against.

This was all very constructive, because it showed you that without the pressure from the iShares 20-Year-Plus Treasury ETF (TLT) (bond buying), you had some genuine interest in many stocks. It's also obvious that until we are out of the woods, you must never pay up for stocks, because they sellers just drilled everything that was up -- Facebook (FB), Celgene (CELG), Workday (WDAY) -- until they were no longer up, and then either walked away or finished.

The one thing that was certain this session is that the sellers actually had some limits or ran out of stock to sell. Doesn't mean they won't be back tomorrow. Does mean that the voracious and horrendous and fearful selling has seemed to run its course. That would be something, because when the market fell apart today, there was an audible sigh of, "That's it, I can't take it anymore, even the fins are selling off." And that, ladies and gentlemen, is the "I can't take it" bottom that causes a bounce just like we had.

Each session is unto itself during earnings season, so tomorrow will have nothing to do with today. Except that you should keep track of the levels stocks hit at the low. They could produce buys once again.

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