Pulling Defeat From the Jaws Of Victory

 Today was looking pretty bad coming in, with an expected collapse of IBM, VMW, and, of course, the Only Stock That Matters, AAPL, but the dip buyers came in and threatened to actually rally the market. The financial sector, enjoying a continuing short squeeze, was hit hard by the news that PIMCO, the new owners of the U.S. Government, are now going to try to force BAC to eat the crap they inherited from Countrywide. That collapsed the financial sector, killing any chance of avoiding a serious bout of distribution. the market appears to be finally pulling in the horses and going into a long overdue pullback.

 You can see the affect of AAPL, which now makes up 20% of the NDX, on the NDX, with a spectacular drop at the open, but a dip buying frenzy that closed it over the open. This isn't going to go down without a fight.

 The dip buyers on the Russell 2000 didn't show up today, although it did not have the spectacular gap at the open the Nasdaq did. It may be headed for the 50dma, hich, in a day or so, should be above the critical support level at 670.

 XLF as holding it's own today, and even went positive for a while, but the news hit the wire and that was all she wrote. Get ready for TARP 2.0.

Here are the sectors since September 1st, which, according tj stockcharts, is 34 trading days. Technology has been by far the leader, with good showings from energy and consumer descretionary. Financials have been lagging, but the market seemed to shrug that off.

If you cut that time in half and look at the last 17 trading days. the picture looks quite different. Only energy and technology have outperformed the market, energy by a mile. That, in a nutshell, is what we have in store for us wth QE 2.

Today could have been a disaster for both bulls and bears, but the bears got the best of it thanks to the financial sector collapse. The strength of the dip buying in technology was surprising, although it was narrowly focused, as a lot of technology stocks did get hammered.

I will have the new highs update shortly.