All is not lost...yet, but Tuesday was bad. We commented Friday that there looked to be good support at the 200-day; the support was not as good as we had hoped. Tuesday the public seemed to lose hope in the market. After several encouraging days, the market made a new short term low.
What we found more discouraging was that market closed near its low for the day. Volume on the NYSE was 30% below the 10-day average, 29 of 30 Dow and 465 of S&P 500 stocks closed lower.
On 8/3/07 the S&P 500 did close near its current price, and rallied back strongly the following day. However, the low close Tuesday puts increased pressure on CPI data released in the morning Wednesday. The market seems to be hinging on our inflationary risks, and higher than expected CPI would most likely quell any hopes of a rate cut.