To say the stock market is jittery is an understatement. We watched the Dow drop about 100 points in a matter of minutes after those headlines from the EU’s energy commissioner. But keep in mind that, technically speaking, despite all the fear, this is still a minor moderate correction. The only problem for the bulls is that it still plenty of room to run, and a stream of dire news feeding it.
Dow Jones Newswires’ columnist Tomi Kilgore penned the following two missives this morning:
While there’s still nothing technical to suggest the current weakness is anything more than a short-term pullback, there’s also no indication that it is about to end. Bottoms are usually characterized by higher intraday lows rather than positive closes, and today’s low in the S&P 500 (1260.79) was below yesterday’s (1261.12). The lowest intraday lows at the market bottoms in March 2009 (667) and July 2010 (1011) were hit the day before the lowest closes (677 and 1023, respectively). Basically, as long as bears can make downside progress on an intraday basis, they have no reason to turn bullish.
And consider this…
The DJIA’s recent ability to bounce sharply off its intraday lows may seem encouraging for bulls, but it’s not really paying off even for those lucky enough to buy at those lows. In the previous three trading sessions, the DJIA has closed more than 100 points above the respective intraday lows. Today, the DJIA is down 109 at 11746, or 85 points above the low (11661). Despite the intraday resilience, the DJIA has lost a total of 239 points in four sessions, and is now 151 points below Monday’s low (11897). Basically, the “buy on dips” strategy isn’t working for anyone but day traders.