Throughout this correction a suspicious pattern of overnight buying has occurred – someone is sitting there in the overnight session (which is thin) and bidding up equities. We've seen this during previous corrections earlier this year and in 2010 and 2011. Let's just say if someone has an agenda to bid up markets (since perception is everything nowadays) you can do it overnight for a fraction of dollars than during the daytime. But whatever the case we had another last nite (well before any news out of the UK of "better than expected GDP") and gapped up strongly to start the day. However all of that has been lost as the entire 12 pt gap has been filled. This is now day 3 below the April 2012 high of 1422 on the S&P 500 after gapping right to it this morning.
The inability to rally off of oversold conditions for more than a few hours speaks to a lot of weakness out there. Again at any moment we can see a rip roaring 3% oversold rally but for most it will not be worthwhile taking the body blows it requires to benefit from said rally while waiting for it to appear. While the indexes are somewhat benign a lot of individual equities are randomly blowing up to the tune of -3% here or -7% there or -5% here on a daily basis.
S&P 1404 begins the next level of support, below that is the 1395 spoken of a few times the past week.
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