Stocks Give Up The Ghost, Close Near Lows
A disappointing end to a truly volatile week. The market closed near its lows for the day, as sellers emerged and investors worried about more writedowns coming out of Europe and the possibility that a large hedge fund is liquidating.
The ARMS Index was high all day, as was the put/call ratio, but they didn't help much. Sentiment is still extremely bearish, in some cases the most since 1990, which is why I think the market should still work higher before any retest of the lows.
The big wildcard next week is the Fed. If these knuckleads screw up again, the market could express disappointment in a hurry. I hope that the Fed cuts another 50 basis points. I think the financial companies need it, and they can worry about taking the cuts back once we get past the hump.
Although the S&P 500 bounced ever so slightly for the week, the Nasdaq 100 had another terrible week, and has now been down for 6 straight weeks. I think that index is due for a sharp rebound rally.
Even the companies that reported strong earnings saw their stocks decline as the day wore on. I would keep a list of these stocks, as they should be nice bounce candidates if the overall tone of the market improves next week.
Thanks for reading, and have a great weekend--