Financials give up all of Tuesday's gains; on top of that home builders, REITs, techs and retailers were also weak.
The issues were again around the Government Sponsored Enterprises--Freddie Mac down 23 percent, Fannie Mae down 11 percent; as I noted before, the most likely concern is short sellers continuing to press the stocks on concerns over their exposure to mortgages vs. their capital base.
On top of that an, article posted on the Fortune website just before 2 pm ET may also be a contributor to the weakness. In it, the author basically goes over the recent Lehman Brothers analyst report, and is titled: "The Fannie and Freddie doomsday scenario: It's time to wonder what would happen if Fannie Mae and Freddie Mac failed."
There have been a series of 90 percent downside days (days where the down volume/up volume and points gained/points lost exceed 90 percent) in recent months; for a bottoming process to form, traders are expecting some sign of buying enthusiasm. This would typically take the form of a series of 90 percent UPSIDE days.
But it isn't happening. We are continuing to see selling into any rallies. It is unfolding as bears have hoped: it's not over until all hopes are dashed, and even the leaders are taken out and shot.
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