Hopes of a "V"-shaped market recovery ended with a thud Wednesday as stocks gapped lower at the open and the selling continued all day. There was a little last-minute buying and a couple of small intraday bounce attempts, but the theme of the day was "get me out now."
Some buyers were feeling optimistic that maybe the worst was over after the indexes bounced four out of five days and produced some of the biggest gains in many years. The primary argument for that belief was that the huge stimulus would put a bid under stocks and keep them running higher.
The technically inclined proclaimed that this action was nothing more than a typical counter-trend bear market bounce and, after the action, that is exactly what it looked like. The senior indexes still have to fall further for a standard retest of the lows to occur, but small caps are well on their way and sectors like banks aren't far behind. Another day of selling like this will cause some concern whether the recent lows will even hold.
The weekly unemployment data is released Thursday and it would not be a big surprise if it hit 5 million new claims. The optimists are hoping that this bad news is already anticipated and that there won't be a major negative reaction, but there is so much economic uncertainty in addition to unemployment that it will be hard to know exactly what is moving the market.
I am going to sound like a broken record, but I want to repeat that there is absolutely no rush to buy anything at this point. You are not going to miss out on anything if you don't rush to buy into the teeth of a decline. There is nothing more unproductive than having to make up unrealized losses. Many people just can't resist the temptation of buying weakness as they are fooled into thinking it's a bargain. Stocks are not like other assets, and are not necessarily better just because they have a lower price.
Have a good evening. I'll see you tomorrow.