Twice today investors and traders sold an intraday rally. Think we might have a pattern here?
After hitting a 0.38% gain at 11 a.m. New York time, the Standard & Poor’s 500 went into a steady decline. Then, after having rallied by 2 p.m. to just below that 11 a.m. gain, the stocks in the index sold off again.
For the day the S&P 500 finished down a big 2.1% at 2588.19. The Dow Jones Industrial Average was lower by 1.77% on the day. The NASDAQ Composite took a beating to record a 2.43% drop.
This is the 10th straight session in which the S&P 500 finished the day below the midpoint of its intraday range. Where once traders and investors bought each dip; it now looks as though they’ve decided to sell each rally.
Overall, the market this week looks like the market from the end of January through the bottom on February 8. The range for intraday movement is expanding and the S&P 500 is down almost 7% over the past 10 days.
At today’s close of 2588.26 the S&P 500 is within waving distance of the February 8 low at 2581. In fact today’s close is so close to that low that the odds are–short of some market-moving piece of good news over the weekend or on Monday–that we’ll hit that February low at 2581.
Then the question will be “Will the February 8 low hold?”
Again, I think the odds are that it won’t. (Just weigh up the negative trend in the near-term news flow, please.) I suggested yesterday that a break below that February 8 low would produce another bout of selling. Maybe even enough selling for it to qualify as one of those “wash out” panics that removes the weak hands from the market. I think the market needs something like that to regain its equilibrium here. Although I’m not convinced that a capitulation on a break through the February 8 low would set the stage for a sustained renewal of the 2017 rally.