August 18, 2008

We’re not trying to make light of the sell-off that we saw across the entire market today, however, at this point, can we look at this sell off as anything other than a light volume pullback? I don’t think you can. Each sell off, no matter how extreme it is, continues to drop off in volume. If there was any conviction to this sell-off, it would have to be done on heavier volume then what we are seeing. The bears are really nonexistant. It is not so much that they are shorting this market to oblivion, rather it is more so just a shere lack of buyers. Which in reality is not all that surprising when considering the run that it has made over the past month. At this point we have not seen any type of technical damage done to the rally the market currently finds itself in.

Also, much of the financial sector saw heavy selling pressures due mainly to Freddie Mac (FRE), Fannie Mae (FNM), and Lehman Brothers (LEH). But seriously, these guys have been in the news for quite sometime now, and anything that comes out of any of those three companies should not be all that surprising. Government bailout has been a strong possiblility for quite sometime now in regards to Fannie and Freddie. Our best educated guess is that the markets used the news that we saw out of financials today as a reason to take a breather and give back a little.

Here’s the NASDAQ and S&P charts…