Stocks continue to struggle with the Fed's Quantitative Easing hangover as the S&P 500 and NYSE Composite get hit with a day of distribution. Sellers got to work again pushing stocks lower in the morning session. Riots in Europe certainly did not help ease any fears traders have over the economic conditions in Europe. At today's lows the market returned to the same levels the market was at prior to the Fed's announcement of Quantitative Easing infinity. While we closed off the lows of the session there wasn't much to cheer about. A few leading stocks were able to hold their gains, but we'll need to see buyers step up. Our uptrend is still intact and under pressure.
We do not have a pile up of distribution where we'd normally see during a topping market. Today's distribution on the NYSE and S&P 500 weren't MAJOR distribution days. In fact, volume just snuck higher. In addition, now with the market at these levels we are quite oversold. McClellan oscillator is not sitting at -200 (T2106 ticker on TeleChart). Conditions can always worsen, but we are at a level where we normally see the market bounce. Add in we only have two days left in the month there is always the possibility of the market window dressing its gains.
It will be interesting to see how sentiment has shifted post Fed easing. AAII sentiment has favored the bulls, but last week's reading pinned the bulls at 38% and bears at 34%. Not overly bullish or bearish. However the II survey had been quite bullish. Sentiment is a tricky indicator, but at extreme points it becomes an excellent talking point.
A few stocks like FTNT, SWI, and GNC who were setting up as leaders continued to see sellers today. ELLI has been a tremendous winner and at one point was down more than 7%. This type of action in leaders normally is a bad thing for the overall market. However, we are in QE land where normal is anything but. Given the lack of distribution and oversold conditions this uptrend may still have something left.
Great news, the NFL referees may be back! Perhaps the NFL should have listen to one of the golden rules, cut your losses short!!!