That Hurt

S&P500 daily at end of day

End of Day Update:

Stocks took bullish, blowout earnings from AAPL and turned them into a gut wrenching selloff. When the market crumbles on good news, you know we are in trouble. Some blame the weakness on the Fed’s midday policy statement claiming the economy is expanding at a “solid pace” and job gains are strong. Funny the world we live in when great news triggers a 40-point intraday selloff.

But this shouldn’t surprise regular readers of this blog. For a while we’ve noted the weak demand every time this market tried to rebound. The elevated volatility is also a grave concern because it tells us the market’s personality is changing. That doesn’t mean we are headed for a 2008 style collapse, but we shouldn’t automatically expect every dip to be a buying opportunity. We knew this pattern couldn’t last forever and this time the weakness feels different.

Today’s selloff closed above key psychological support at 2,000, but the market closed before the late-day sell off could take us any lower so I’m not sure that qualifies as holding support. There is a lot of pressure on bulls to get this turned around Thursday. If we break under 2,000 support, December lows and the 200dma are the next stop as formerly confident and complacent bulls turn into scared sellers.

While I remain skeptical of this market, I will have to reevaluate my outlook if the market bounces and breaks through overhead resistance at 2,060.

No doubt Thursday will be an interesting and insightful day.

Jani