The market extended its losing streak to six consecutive days, but once again the damage could have been much worse considering where the session opened. S&P futures were down more than 10 handles at the 9:30 bell and sold off in the first hour before rallying into the gap. Stocks went green for only a few minutes in the early afternoon before fading a bit into the close. The Dow was hit hardest, closing down 0.75%, while Nasdaq showed relative strength only shedding 0.39%.
From an active trader’s perspective, it has been a difficult environment to maneuver. Yesterday we fell hard on Europe concerns, but rallied strongly into the close to minimize the damage. Traders who perhaps bought on that reversal were left frustrated by this morning’s open and the action in the first hour, but then we rallied back to close the gap temporarily. We closed right in the middle of the day’s range, so the next leg for the market is anyone’s guess.
We are not yet at extreme oversold levels that precipitate a big snap-back type bounce, but we could easily drift or consolidate for a few days. Investors are still trying to interpret what the European political shakeup will mean for the market. Gold (GLD) fell hard again today, losing 1%, as the anti-bailout crowd gains further influence across the pond.
Apple (AAPL) led the charge in the late morning, getting into positive territory, before also losing steam. The market leader is forming a tight mini consolidation near major support from before earnings, and traders should keep a close eye on both ends of that range.
Banks have been heavy overall, but I am starting to look to buy the dip in the strongest names, always led in my mind by JP Morgan (JPM). JPM fell down near its 100-day moving average today, and I am taking a position overnight.
Disclosure: Scott Redler is long JPM, SPY.