The bears won their sixth-straight Monday as the market fell slightly following Friday’s huge pop. We mentioned before Monday’s open that much of the rally came on short-covering and low volume and the advance only evened things up for the week. The bulls have to be disappointed there was no follow-through but anything can happen in a trading range and they did see some green yesterday.
Much of the negativity can be blamed on China worries and the IMF (International Monetary Fund) which released its global report. China’s stock market touched a 3-year low yesterday after its Premier warned that economic growth woes could continue for “some time” despite Friday’s report the country’s GDP (Gross Domestic Product) would be 7.5% for 2012. We have written before China can come up with some funny numbers and it was just last week its Premier warned that the country’s recent interest rate cut won’t spur a rush to buy houses. The 7.5% growth rate was less than the 9% Wall Street had penciled-in but it wasn’t as bad-as-expected so the market rallied. Yesterday was another reality check that China is in the same boat the rest of the world is in.
The IMF echoed those statements as it downgraded China’s outlook as well as the U.S. of A. The 2013 growth rate for us here at home was bumped down from 2.4% to 2.3.% and the eurozone from 0.9% to 0.7%.
The Dow gave back 50 points, or 0.4%, to end at 12,727. The blue-chips traded to a low of 12,690 and never really made an attempt at 12,800 which is resistance. The bears are still trying to put the leather on 12,600 so they can ride the bulls lower.
The S&P 500 slipped 3 points, or 0.2%, to finish at 1,353. The index kissed a low of 1,348 but held 1,350 which kept a run to 1,375 open.
The Nasdaq dropped nearly a dozen points, or 0.4%, to settle at 2,896. Tech closed below the 2,900 level (again) and we would like to see a finish under 2,850-2,825 this week.
The Russell 2000 declined 4 points and went out at 796.66 while the S&P Volatility Index ($VIX, 17.11, up 0.37) added 2% but failed to clear 17.50.
As we head to press, futures are showing a nice pop at the open: Dow (+52), S&P 500 (+5), Nasdaq 100 (+15). Don’t forget, Ben Bernanke speaks at 10am (EST) this morning so look for volatility to pick up. We have a lot to cover today so make sure you read the Members Area carefully.