Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Yesterday was one of the more volatile sessions we’ve seen in a few months. After a gap up, markets took a new leg higher on the ISM data, then looked to be basing nicely for a few hours consolidating the large morning move. Then starting around noon during Bernanke’s Q&A leg one of a selloff began, which led to another leg down later in the afternoon which completely filled the morning gap. So a full round trip. This morning we have another gap up as we celebrate Spain moving towards a bailout. (“free market capitalism”)
Taking a step back it’s been very choppy since the post QE high on Friday Sept 14th. The S&P 500 is creating a series of lower highs as the index is getting pinched within a wedge/triangle. The next step is to observe which side of the triangle it breaks out of, but most of the movements within this range are relatively meaningless.
Obvious of late has been the relative weakness of higher tech beta, especially Apple. The general of the market has broken its 20 day moving average and is sniffing out its 50 day.
This has weighed on the ultra popular QQQ ETF as well.
There continues to be a lack of participation by the transports and semis, while oil continues to have little bid; all of these areas are generally areas one would want to see working for “risk on”. The lack of even a dead cat bounce in these areas is a bit strange.
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