July 24, 2008
If you were starting to feel the slight bit optimistic today, I’m sure you had the wind knocked out of you by the time the market closed. But to be completely honest, I’m surprised that the market made it as far as it did without the type of sell-off that we got today. But it just goes to show that there is a lot of fear in this market still – and let’s be frank, the housing report was not that big of a surprise. Yes people were “hoping” for some sign of recovery in the market, but there is a big difference between “hope” and what you inherently know to be true and that is, the housing crisis is far from fixing itself. A couple of positive days in the market and a couple of feel good comments from a bunch of know-nothing bureaucrats does not change the status quo.
Speaking of status quo, we wrote last week that despite two significant rallies, the status quo had not changed and therefore, the market has not finished correcting itself (we’ll use correction instead of recession so that we don’t lay it on too thick!) and until there is a legitimate change in the status quo, the market will continue to find reasons to sell-off.
A word to the beginning investor and trader…
While the NASDAQ and S&P both declined today the volume wasn’t as strong as it has been in recent days when the market was rallying. Some may point to this and say that the market is merely pulling back. But something worth noting is that while a rally needs to see a strong volume surge, a strong sell-off isn’t always met with the same strength in selling power. What you must take from today’s market session was that even though the selling power was less, the volume was still above average overall.
Here’s the NASDAQ and S&P Charts…
