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Another Late-Day Market Fade

Another late-day fade: lack of progress on the debt ceiling, and the consequences of a credit downgrade, are continuing to weigh on stocks, but it's more complicated than that.

Many traders are anticipating a relief rally when the debt ceiling is raised, but traders are already arguing that any rally should be discounted on weaker growth expectations for the second half of the year...with or without a ratings downgrade.

Tomorrow we get Q2 GDP, for example...expectations are for anemic growth of about 1.8 percent, but I know traders who think it could come in the low-1 percent area.

Bottom line: the smart money is getting small, not chasing rallies and not putting a ton of stuff on. We saw that yesterday when volume was heavy on a down day...and even today, with stocks oversold...volume is light and there is little appetite to buy.

So what do you do? You become a technician! We got a modest rally this morning when the S&P again moved above 1310 (the 50 day moving average)...and now we are fading again, so the next big level is the 200-day moving average...which is 1283.

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