Market Closes At Its Lows

The market got a little ugly into the close, as some panic selling surfaced. Measures of investor anxiety were elevated. The volatility index (VIX) spiked another +24%; the CBOE put/call finished at 1.08; and the ISE Sentiment Index was equally depressed at 108.

The financials really weighed on the market today. Congrats to Mr. Cuomo for shouting fire in a croweded theatre with his comments about Wamu (WM). Doesn't Mr. Cuomo get a lot of money from hedge fund contributions? Aren't those funds short the financials? Just asking.

We've seen this volatility all year, and it always ends the same way. The bears overreach until a short-covering rally ensues. Then the market finds its footing and goes back to new highs. As it stands, the Nasdaq is only 2.4% off its highs. And we care more about that index because it has been the leading index all year.

Tomorrow morning will likely be weak again. But Morgan Stanley's write-off after hours was not as bad as many had feared. Maybe that can spark a rally in the financials.

Regardless, I still believe that we will end the year at higher levels, and that this could be the last shakeout of any weak holders before some sort of year-end rally unfolds. I admit I have been a little early, but timing is rarely perfect.