Bad News Is Bad News

I'll start with a quote from today's Market Ticker:

"The sell-off yesterday was predicated by not only the Barrons' article I cited in the weekend Ticker, but also by a Reuters follow-up and, when queried, Treasury confirmed that it had no intention of immediately bailing out Fannie and Freddie.

Now of course that wasn't Paulson who said that, and we know the game by now, right?

That is, you let the market get frothed up good on the short side, all the Bears come out and sell the beJeezus out of anything Financial, and then, out of the blue, after you call certain "friends" to tell them in advance you suddenly "JamJob" the market with some sort of "news" that you're going to fix it."

It seems like more and more people are thinking that Paulson is up to some hanky-panky here.

On the positive side, the SPX has strong support at 1263. On the negative side, the trend is broken. Whether we go down from here or trade sideways for a while, it appears the rally is over.

The market started the day down despite lower oil, which is a bad sign. Higher volume today is also a bit distressing. The Nasdaq's trend is still intact, and is testing it's next support level.

The bigger they are, the harder they fall. Bigger, as in bigger rally, in this case. The Russell has almost doubled the move of the SPX. It is also sitting near a critical support level.

Most of the market was down early, but both the dollar and oil reversed intraday, sending the energy sector up. Oil looks like it is going to settle into a 110-115 range, which means this will stabilize here as well. MACD and RSI both indicate slight upward momentum. I think the rotation back into energy is starting.

There is nothing on the earnings sheet scheduled to report tomorrow, which is good because I need some time to look at some potential additions. I will update the sheet as soon as I have any changes to it.