Thursday, March 17, 2011

Daily Market Commentary: Extends Losses

There was no escape for bulls as the breakdown gap from the open held. As a result, bulls were unable to grab control of the market in the fist hour. When this buying exhausted control was ceded back to bears.

Selling in the S&P was able to dig fingernails in at yesterday's lows on heavier volume distribution. Based on my sectorbreadth analysis, the S&P has not reached a bottom (but it's close).



The Nasdaq closed outside of its downward channel. Higher volume distribution was also in the picture; since the gap down there have been eight distribution days to one accumulation day.



The Russell 2000 wasn't as hard hit as other indices. Wednesday's selling actually left it sitting on downward channel support and positioned for a bounce.



The Dow Jones Index had been relatively immune to the selling. It had been the last to crack outside of its rising channel from last summer, but it's making up for it now.



Days like today offer bulls little confidence. Any goodwill built up by yesterday's slog up the hill by buyers was quickly undone Wednesday. I doubt many will be willing to jump back in from the sidelines, and in the absence of buyers (not necessarily seller with participation) markets fall under their own weight. The Russell 2000 remains the best long side opportunity given it held support.

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