Many bulls had to be disappointed with the lack of follow through buying on Monday after Friday’s mini rebound.
The upside attempt was there, as the chart shows, but in the end we closed near the day’s lows; not a good sign.
As I am writing this late Monday night (actually Wednesday morning here in Germany), the futures are pointing to a sharply lower opening with the SP 500 being down some 1.5%. This can change of course, but for right now it appears more downside pressure is lurking.
The European crisis remains with us, but saber rattling in Korea may add to more uncertainty in the market place with other hot spots waiting in the wings. Economically speaking, there are still tremendous real estate bubbles in the making in Canada, Australia and China, any of which can burst at anytime contributing to more market negativity.
Our domestic Trend Tracking Index (TTI) slipped with the sell off yesterday and only remains +0.81% above its long-term trend line. It will not take much downside momentum to move this indicator into bearish territory as well.
No matter what the market will do next, I am far more comfortable with the fact that we have greatly reduced our exposure (due to our sell stops) with only a few sector funds left in our portfolios.