Trader Talk

Today's Market Has Very Clear Pattern

If you're confused about today, don't be. There's a very clear pattern: take companies that are underperforming their sectors, and even a couple industries underperforming the S&P 500, and press them. Shorts are very active today.

Look at AMR . As of 2pm ET, halted 7 times, several of those halted due to upside activity. Everyone knows AMR is the weakest of the large airlines, so throw together a few mumbled comments from analysts and a story on AMR airline pilots cashing in their pensions and you have a successful short press. (How do circuit breakers work?)

In financials, the weakest stocks recently have been Bank of America , Citigroup , and Morgan Stanley . With the Bank Index down 2.9 percent, all three are substantially weaker than the BKX.

How about semiconductors? Micron and AMD have been big underperformers recently; with the PHLX Semiconductor Index down 3 percent today, MU is down nearly 12 percent, AMD down 9 percent.

It can extend to underperforming sectors as well, such as energy and materials. Both sectors hit new lows on Friday. Coal names like Alpha Natural Resources have been particular targets,down more than 7 percent today.

Finally, think technicals don't matter? The old closing low for the big trading range of the past two months has been 1119 on August 8th. As we passed that about 12:30 ET this afternoon, the market moved straight down. The old intraday low was 1101 on August 9. We were as low as 1104 at 2:30 PM ET.

Any good news? Well, the VIX volatility index, pushing 45 is at the high end of its trading range and in a neighborhood that has been associated with market bottoms in the past two months.

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