Buyers showed some interest to start the day, but the energy faded, and money started to move back to the sidelines when the S&P 500 was unable to hold the lows that were hit on Friday at around 4386.
The selling into the close was sufficient for the S&P 500 to fill the gap on the chart down to 4360, but the bad news is that there isn't much support under that level.
Breadth deteriorated all day and finished at about two gainers for every three losers. Small caps -- as seen in the Russell fund (IWM) -- exhibited some slight relative strength, but there was some bidless action in thinner stocks that caused some pain. Cryptocurrencies were a bright spot, but the primary winners within names that moved more than 10% were biotechnology names like Ocular Therapeutix Inc (OCUL) , Flexion Therapeutics (FLXN) , and Protagonist Therapeutics (PTGX) .
Overall it was dreary action, but it is just a normal part of the corrective process. As I've written often -- bad markets don't scare you out; they wear you out. Market bottoms typically occur with a whimper rather than a bang. There is plenty of whimpering out there, but we probably need a higher level of disgust before we hit bottom.
I continue to feel we are developing conditions for a good rally, but that means we have to deal with a correction for a while longer. The biggest worry out there right now is interest rates. The chart of the 20+ Year Treasury Bond fund (TLT) looks very poor, and there is no good support there right now. We have a consumer price index report coming up and then some bank earnings news that will drive the next move in bonds.
The market is doing what markets do. Our job is to protect capital and navigate it the best we can, while we wait for further developments. As Hyman Roth said in "The Godfather," "This is the business we have chosen." It isn't always going to be easy.
Have a good evening. I'll see you tomorrow.
