What was supposed to be a boost to the markets instead resulted in a sell-off today. Over the weekend, the Eurozone agreed to lend Spanish banks up to $125 billion to curtail any runs on the banks. While the news was initially met with much excitement and higher stock prices, by the close of the markets most were flat to down. The US markets were among the biggest losers as the S&P shed 1.26%. After impressive gains last week, we are now in another dangerous position. The S&P gained nearly 4% last week to recover some of the losses over the last several weeks. However, as mentioned in our bi-monthly newsletter, a 3-4% bounce was to be expected and it would be what happens next that is important. We are now at that point. Will the markets continue the selling into tomorrow and through the week or will it bounce back and move back to recapture the technical damage done over the last two months?
Today was a very bad day for the bulls. With news to rally on, they failed to hold their ground. The selling also intensified near the close - never a good sign. If the bulls can't stave off the losses tomorrow, we are likely headed back to the lows of June 4th where there is a big line in the sand. If that level breaks, it could really get ugly. For now, we remain defensive and will wait to see how it plays out over the next few days or weeks. Investing is never easy but it is especially hard at juncture points like we are in now.
Welcome to the extended version of the BAM Market Note. We are not bloggers by nature but have had clients and friends inquire about our thoughts on the market in between our newsletters. The number and content of posts will likely be determined by the conditions of the markets and the interests of our readers. We would greatly appreciate your feedback and comments.
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