Market Still Churning Below Resistance

The market rallied a bit into the close to mitigate some of the selling damage. Volume finished at below average levels. Breadth was negative, but the Hi/Lo index is still in positive territory.

The market is now short-term oversold, and will likely rally this week. But bearish sentiment is only beginning to build. The put/call ratio was above 1.0 today. If the market rallies this week, and then comes back down to test recent lows, I suspect that will bring out a lot higher levels of pessimism and get some recent bulls to throw in the towel.

While some former market leaders are well off their highs (AAPL, SNDK, GOOG, etc), others have been hanging in very well (VAR, GS, WFR, STX). I think the latter make better trades as we come out of this correction.

Have a great night--

long GOOG