In the early going, it looked like we were going to see standard first-day-of-a-new-month strength. To help the bullish cause, even the ISM number was better than expected but the buyers ran out of juice midday and the market closed poorly. We saw positive breadth and the Dow Jones Industrial Average had a good size gain but the Nasdaq was red and the S&P 500 not far from it.
This sort of action, where the market reverses sharply after early strength, is another example of that happens as a market starts to top. Rather than chase the strength, it is used as an exit point and we end up with the poor close. Typically, in a struggling market, the market will open strong and close weak. We have now seen that happen for seven of the last eight trading days.
I'd probably feel better about this market if I didn't keep hearing how there was nothing wrong with the action and how a 'melt up' is likely but there is too many individual stocks such as Apple (AAPL), Baidu (BIDU) and Amazon (AMZN) acting poorly. While it is possible that the market will find support and turn back up, the buying interest is nothing like it was just a few weeks ago.
We will likely see some news about a bailout of Spain soon and we are waiting for more economic data to come out. But we need to see sustained strength on good news and not the sort of action like we had today.
I continue to believe that the market is undergoing a topping process and I'm going to remain cautious until the conditions change.
Have a good evening. I'll see you tomorrow.