Monday, March 05, 2007

A Disappointing Day

I really thought the markets had bottomed this morning, at least short-term. But the bears had other ideas, and easily swamped the market.

Large-caps fared a bit better, with the SPX down -0.9%, while the mid-caps fell -1.8% and the small-caps fell -2.0%. By sector, the housing index fell -3.0% followed by the brokers (-2.6%). Just about all the sectors were lower on the day.

Volume rose on the NYSE (distribution), but eased slightly on the Nasdaq. Oil almost closed below $60, and has basically broken its uptrend that started in mid-January.

The volatility indexes rose again, and have now eclipsed last week's highs. The put/call ratio also soared, and the 10-day moving average hit a new record (my data goes back to 1995). That's quite a number of puts being bought.

While this is bearish short-term, I would be more worried longer-term if these declines were merely met with complacency and shrugged off. But when everyone runs for the exits at the same time, and at any price, I feel better that this is not the way bull markets end. They end when everyone is as bullish as all get out.

Make a note in your trading journal, as we will look back at this period as another good buying opportunity.


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