No Rally Into The Close

The markets closed down today, as a potential late-day rally fizzled. It felt like forced selling, like some large funds are trying to meet liquidations.

Breadth was horrible, with decliners swamping advancers, and the Hi/Lo index falling further. About the only silver lining was that volume ran lower than Friday, so it does not qualify as a distribution day.

The selling was exacerbated today by a weak housing report, which worried the market that this sector could experience a hard landing, and take the economy down with it.

The SPX lost -0.9%, while the small-caps underperformed and lost -1.8%. The energy sector fell -3.8% and materials lost -2.1%. With commodity prices falling further, it seems more and more likely that the peak in inflation is behind us.

It seems funny to me that this peak is coinciding with a peak in inflation rhetoric out of the Fed governors. Those guys should just be quite already. I am convinced that they are fighting a battle in a war that has already been won. I hope they look back on all of their public comments and ask themselvs what they were thinking?

Today's action does not negate the possibility of a follow-thru day this week. Market bottoms are not easy, as the market does its best to shake the confidence of the greatest number of investors. But I still feel we are late in this decline.
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