Posted on September 9, 2008 - by andrew

Market Recap - September 9th, 2008

The markets suffered huge losses in mixed volume today:

• S&P 500: -3.4%
• Dow: -2.4%
• NYSE: -3.6%
• Nasdaq: -2.6%

Volume finished lower on the NYSE and slightly higher on the Nasdaq. Today’s action confirms the market’s bearish mood:

• Large losses are ugly regardless of volume - The Nasdaq was the only index to officially suffer a distribution day, but today’s huge losses were still a bad sign.
• Drop in oil prices didn’t help - The markets typically go higher when oil goes lower, but this correction has been different.
• Large losses during rally attempt - it was be bearish to see the markets lose a chunk of yesterday’s big gains
• Negative intra-day reversal - the markets opened higher today (up nearly +1% at one point) but closed much lower. Strong markets do the opposite.

One silver lining is that several of the worst hit sectors today were former leaders, which could be a sign of sector rotation:

1. Fertilizers
2. Energy-Other (including Solar and Coal)
3. Oil exploration

Conclusion: The market remains in a correction. Here’s what you should be doing until the market rallies:

1. Avoid buying stocks until a new market rally is confirmed.
2. Keep a watch list of growth stocks that show resilience and/or building sound base patterns.
3. Watch for growth stocks belonging to new leading sectors as old market leaders make way for new ones.