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Thursday, December 4, 2008

Market Under Pressure

Today was looking like it was going to be a half decent day, despite another round of bad news, but the last hour saw another collapse. TYhe market is under a lot of pressure as any strength is being sold into. Technically, there was not a lot of damage done as key support levels held, but overhead resistance is keeping us back. Tomorrow's job numbers could get pretty ugly.

The Nasdaq tested key support as well, and held. It is seriously underperforming the SPX right now, not very encouraging for a decent rally.

The Russell 2000 stayed green most of the day, but collapsed at the end. It is alternating days of weakness and strength. What the significance of that is, I don't know, but I suspect that any rally is going to have to be lead by the small caps.

Incredibly, XLY, consumer discretionary, lead the market and stayed strong as the other sectors were pulling back. Energy just got absolutely creamed again. Retail, especially clothing, was an area of strength a few months ago, but got hit pretty hard in the crash, but they could be coming back.

XLY is the ETF for the Retail sector, and after showing severe weakness in the September-November time frame, has been seriously outperforming the market since it hit bottom. As I said this morning, maybe investors are thinking it can't get any worse.

I mentioned a few days ago that the money we have pledged for the bailout is greater than the inflation adjusted cost of World War 2. I couldn't remember where I had seen that, but Econompic Data saved me with a chart today. It is really incredible just how much damage this is doing, it could be years, if not decades, before we recover from this debacle.

I will be back in a couple of hours with an update.

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