There is a sour mood on the Street today. This is the first time in a while all sectors are down despite a stronger dollar and lower oil...bears are now arguing that we will see more correlated moves going forward which, they say, is the way its supposed to be in a down market.
And what about oil? A cynical mood has taken over here, with traders arguing that while lower oil is a help to the economy, it is not the savior of the economy.
Wait, the cynicism gets deeper. The biggest complaint is the vicious moves in either direction. As one veteran trader told me this morning: "What I buy on Monday, goes down on Tuesday..what I short on Tuesday, goes up on Wednesday." This is the nature of bear markets, bears keep saying: all the bulls have their hearts broken. The difference here is that in THIS bear market even the bears get beaten up.
Internal indicators are terrible today:
1) several indices have broken to new lows: a) The NYSE Composite Index broke through its July low and is now at a 2-year low, b) the Dow Utilities broke to a 2-year low, and c) the Philadelphia Stock Exchange Semiconductor Index (SOX) broke to a 5-year low.
2) new lows on the NYSE are at their highest levels since just after the July lows.
Everywhere today there are reminders that investing has become a landmine:
1) Home builders Hovnanian and Toll Brothers have signaled that while there may be some signs of a bottom, there is no sign of a rebound in housing;
2) Retailers have reminded us that--outside of Wal-Mart--retail sales have been weak and the recent rally in retailers as an early cycle play may be overdone;
3) Machinery companies like Terexare reminding us that formerly strong demand for equipment is now slacking off;
4) Techs are weak, as companies like Cienaare saying that phone companies are delaying purchases of communication equipment due to a weaker economy; yesterday display companies like Corning and Lg Display are reminding us that even the formerly hot area of flat panel TVs are showing signs of slowing down.
Bulls argue that economic news has been better recently. That's true, but bears argue that the poor company commentary is a better leading indicator. The key point: the bearish position has consistently been the most accurate, and for the moment they retain the rhetorical upper hand.
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