Another Distribution Day
The market finished near it's lows today, and volume rose on both exchanges, making for another distribution day. The selling has certainly been nasty, but the market is now deeply oversold.
Brokerage stocks (-2.9%) and materials (-2.6%) were hit hardest, though every sector I follow was down on the day.
It looks like I was a bit early in calling for a snapper in the market today. But I stand by my call, and think the market will finish higher into the end of the week. Measures of investor pessimism spiked today. Witness the CBOE put/call ratio hitting 1.72, or the VXO index spiking +25% intraday, to levels not seen since October 2005.
It is somewhat rare to see such a big spike in these fear indicators this early in a correction. Typically, the indicators spike toward the end of a correction, as investors throw in the towel. As such, I suspect that we should get a pretty good bounce. But since this correction likely needs to put in more time, I will be looking for some sort of retest after said bounce runs its course.
posted by J. Kahn @ 12:53 PM
2 comments
2 Comments:
Everyone was chalking up the huge selloff to inflation fears. I don't buy it. If it was an inflation driven sell-off, it should have bolstered commodity stocks, which have been selling off for the last week. Instead, they got crushed, too.
Kevin,
I think inflation fears were the start of the blowoff in commodity stocks. But after parabolic moves like that, there is nothing left to hold prices up there. They have nowhere to go but down. Those moves just arent' sustainable, regardless of the outlook for inflation.
Post a Comment
<< Home