When yesterday I said, "Just how much more selling remains immediately in store is somewhat uncertain," I probably should have recognized there was more reason to be certain when, just prior to this I indicated, "This is as weak as a weak bid gets."
In other words, the bid could only strengthen ... which, of course, it did today. Obviously, I was not alone in recognizing recent days' imbalance. Yet was the nature of this recognition largely "technical," and so likely to prove fleeting?
Relatively elevated hedging of long equity positions (via put options) we are seeing of late thus far is failing to result in any kind of sustained bid leading to a decided turnaround in the market. Here again it appears a certain element more or less mechanically is acting as it has in the past — taking on hedged long equity positions following protracted selling — and none of this action is yet to present anything of consequence in the grand scheme of the market's decline thus far since late-April top.
Much like the case with today's turnaround, the substance of the market's bid of late (post-"flash crash," as revealed by the CBOE Put/Call Ratio) appears entirely technical in nature.
Enter the BIG problem with this...
Judging by profoundly negative readings of every McClellan measure applied to composite indexes gauging trading on each major U.S. exchange (NYSE and NASDAQ) the market appears on the verge of collapsing. Indeed, you are hard-pressed to find such conclusive, ominous evidence anytime over the past three years.
To my way of seeing things this conclusion is made only all the more foreboding by the current message being delivered by Spitty, the CNBC clown. Being both near-term negative and long-term complacent, Cramer's "unlikely" Dow 8825 appears a cinch to be taken out ... possibly even by the end of this week. The guy's faith in incompetent cowards unwilling to address a fraud-rife, insolvent global financial system abounds, and this despite the fact that, there isn't a snowball's chance in hell support operations thus far employed to save the unsalvageable can be expanded ... as time soon will prove they must.
The view here today runs counter to recent musings suggesting a strong decline challenging March '09 low might not develop for a few weeks. I fear collapse might be imminent.
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