We've got a long way to go.
US stocks riding a sinking ship without an end in sight, as a tepid jobs report combined with the soaring dollar and European debt concerns weighing on the market.
Stocks, as they have been the past three sessions, are tumbling through some support levels, and just crossed under another one. S&P 500 down 16 at 1047, having dropped through the 1050-1053, which UBS’ Art Cashin says represents another leg down in an Elliott Wave-type selloff.
“Violating that level could heighten probability that wave C has, in fact, begun,” he wrote in this morning’s daily commentary. On the one hand, wave C is the end of the progression; on the other hand, it’s an ugly and long end.
Dow Jones Industrial Average recently off 150 at 9851, hoovering near session lows and creeping closer to a 10% correction from the mid-January highs.
There’s no denying yesterday’s action was pretty ugly. Stocks closing on the lows was a “hardly encouraging short term,” FusionIQ CEO Barry Ritholtz says. And the bears haven’t lost any steam in today’s session. But he remains confident in the market’s ability to rally and says give the “rally/uptrend the benefit of the doubt.”
“The playbook in a bullish cycle – whether cyclical or secular, is you buy dips at support with tight stops,” Ritholtz writes, noting the 1030-1038 level on S&P 500 is key, with 1025 acting as a secondary support level. A 10% correction on S&P 500 would bring index to 1035, and a 20% pullback would bring index back to 920.
“We are flirting with mortally wounding the uptrend line,” he adds.
Timing of the stock market’s recent swoon has actually caught some folks off guard. Time’s Curious Capitalist blogger John Curran admits expecting a correction in early spring, not now.
“Here’s the forgotten truth: The market discounts the future efficiently but rarely on schedule — and we are reminded of that this week,” he says.
Many observers figure stimulus will fuel growth for at least a couple more quarters. But fears that “our economic growth is a product of federal borrowing and therefore unsustainable,” have re-surfaced.
“All it took was a few Euro jitters to bring all these concerns front and center in the stock market,” Curran says. “America’s financial crisis has passed, but we are not yet through with our economic crisis. That means the investors’ seas will remain rough for some time.”
