Well that was just sad!
As we suspected in the morning, a rally that is based on nothing ends up having no support and we failed to retake Wednesday’s highs which led to a crumbling of the markets in the afternoon. Of course $100 oil was no help as the NYMEX jumped 5% for the day and the financials continued to dive, perhaps driven down by the poor news out of Europe this morning.
We got our Nasdaq leadership, only not the kind we wanted as the Composite fell 2% from the opening high of the day while the Dow fell 1% and the S&P droped 1.3% from the top. Google led the Nasdaq down with a 4% drop that didn’t look for a moment like they might change their minds on news that the company’s 10K indicated potential impact to revenues from Google’s efforts to cut down on "accidental clicks."
Telcoms got killed as well as T and VZ went to price war and the whole sector dropped 5% on the day. We were onto this rally just 10 minutes into it when I said: "I don’t like this rally so far guys, be careful! We need a firm break of 12,500 and not getting past it will affirm a top" and we did brush briefly right up against 12,500 and lost it quickly. As I said at 9:47: "The most dangerous thing to do this week is to fool yourself into thinking it’s OK to have $100 oil, it simply is not."
By 10:15 we started covering and thank goodness for that or we would have had a pretty miserable day as all our gains just faded away from that point on. I noted an hour later that it was "nothing more than a huge energy and commodity rally, really nothing to celebrate today."
We took our first new $25KP play today and it’s not looking good as we spread 5 CROX Jun $28s against 4 March $34s and CROX got KILLED after hours on in-line earnings and very slightly lower guidance. HPQ got a boost from a nickel beat along with upside guidance but NTRI and WFMI were also punished for failing to live up to expectations.
On the whole, nothing much happened all day so we continue to wait for clarity as this short week rolls on.
