When I woke up Monday morning and read the news, before I even glanced at what the futures had done overnight, the news sounded downright dire. There were stories that "Buy the Dip" is dead now (this is not news to us where we have pointed out the total lack of buying interest for weeks, even on rallies).
There were stories on how far along we are in the bear market. There were stories of recession coming. I saw a news report Apple (AAPL) wasn't going to sell phones in China. I could go on but I think you get the picture.
I then checked in on the markets, expecting the S&P futures to be down at least 40 or 50 handles with stories like this. But no, they were down maybe 5. That's when I realized how bearish everyone had gotten in the last two days. Sure it's anecdotal but it's gotten to the point where if you're not downgrading or lowering your price target on Apple every day you're odd man out.
Then we plunged. And rallied. Just like last Thursday. Only last Thursday the S&P managed to claw its way back but it did not close green. Monday it managed to get green.
Last Thursday the S&P closed down 4 points and Monday it closed up just over 4 points. Thursday the net breadth on the NYSE was -680 which is not terrible, almost in line. Monday the net breadth was -1,080. Not even close to being in line. It was worse than Thursday.
So we might have seen the stocks that are the index movers reverse but the majority of stocks did not join the reversal party.
That's the bad news.
The good news is that when we were down the number of stocks making new lows on the NYSE and on the Nasdaq did not exceed the prior peak readings. Not yet. So considering so many stocks were on the verge of making new lows, there were still fewer new lows Monday vs. Thursday. That speaks of some selling drying up.
The place where there has been no drying up of selling is the banks. About the only good news I can pass on regarding this group is that Monday everyone seemed to finally notice the banks don't act well. Also, that top in the Bank Index has a measured target around 92. If you take the high of the pattern at 116 and subtract the low around 104 you get 12. Subtract 12 from 104 and you get 92.
So maybe they are oversold enough to enjoy a bounce. That's the best I can come up with for this group.
Where does that leave the market? It's still mixed. We had some drying up of the selling Monday morning but can we get any buying interest?