Another weak session with sellers dropping the hammer on stocks at the end of the trading session. Existing home sales accelerated the selling after its release at 10am EST. The report showed a drop of more than 27% month over month sales figures highlighting weakness in the housing market. Without the government propping up the market home sales are falling back to normal levels, thus getting on with the much needed correction. Quickly, buyers stepped up shortly after the reaction to the housing figures. However, it would not last too long as late day selling completely eroded the gains from mid-day. End-of-day selling added to the fear of a stock market collapse as cash remains king.
While it may be tempting as stocks may look cheap or oversold you are playing with fire. Late day selling show and the lack of movement in the VIX highlights further downside is extremely likely. Oversold and cheap markets can become even more oversold and even more cheap. Tread carefully and wait for better pastures ahead of us. Only a high volume, powerful acceleration to the upside will cure the market of this damaging selling. And it simply won’t be volume higher than the previous day, we’ll need to see above average higher volume.
Cash remains king and until we see the market’s fortune turn around cash and shorts remain king.