Today was the first real belly flop the markets have had in a very long time:
Plenty of technical damage and the first of the month jump failed to happen as well.
What makes this kind of down day different from the usual negative 0.05% days of the last 2 years was heavy volume and a total lack of buying interest. An added bonus was the drop happened so soon after last weeks down day it ate up the entire ramp up since then. Ugly. Still, the S&P 500 ended over the mythical 1300 mark so there is that.
I have put in stops for all my positions and I may get triggered on a few names tomorrow (DAN especially). It is amazing to see charts I liked very much early in the week look bad after a day like today. MFB reports earnings tomorrow (I had somehow missed that when I bought) so that could be a potential ugly spot to be in as well.
I cannot really give a reason for the change in sentiment, who knows what traders are thinking. Saudi Arabia, oil, Libya, QE3 maybe not so much, who knows. Bad news has been ignored for a long time so why not worry now I guess.
Silver is going berserk and now Gold has started to roll as well. While I dream that this is due to a flight to real money instead of paper debt, I wonder how much hot money is flying into metals and especially the miners. A look at silver miner EXK is showing massive buying and a flying price. Somehow gold miner KGC cannot grab a bid.
Ben Bernanke was talking today and that guy is dangerous. I think we will have to start discussing at what point will a FED head be replaced? The Bernank was flippant and dismissive of higher prices for everything. It's just a temporary thing was his defense. Unemployment over 9% was supposed to be temporary too.
A note about the middle east uprisings. Here is how I think the different situations are viewed:
Libya - Annoying but not a major issue
Tunisia - Who?
Bahrain - It's only an island if you look at it from the water, ie who cares
The big dog is Saudi Arabia. Allow me to be absolutely clear here; there will be no revolt in Saudi Arabia. It is too important and cheap energy (not as cheap as before!) makes the world move. If things get even close to out of control in Saudi Arabia it is my firm belief that mass murder and total subjugation will take place. Probably using US military hardware and in a pinch even US forces. They almost declared martial law after a few banks blew up, what do you think is going to happen if oil is at $300 a barrel? In short I would not be betting on a Saudi mess, it will not be allowed to happen.
Have a good night.