Top Line: The market pulled back from the nice run it's had over the past several sessions. The dropped nearly 500 points and then CSCO announced poor results after hours to send the overnight futures down.
The Asian spurt the day before didn't make it around the globe to the US. In fact it fell apart in Europe before the US even opened. Then the ADP, you know, the payroll check company, said that 157K jobs were lost in the past month. This report can sometimes indicate how the Real jobs' report, released on Friday, can look. The estimates for the Real report are for job losses of between 180K and 200K.
As the day wore on, the selling continued until the Dow was down nearly 500 on the day. The possibility exists that the selloff is complete but with CSCO's news tonight and the jobs' report coming up on Friday, Thursday could challenge that theory. The situation is difficult to judge in the short run but we tend to think that the market is looking to Friday morning for information on trading.
At any rate, this selloff may be the punch down some have been looking for...we don't like a further drop because that would mean that there would be another chance for buying. The fear generated in October should have been enough and based on the volatility indexes from that period there really shouldn't be a test of those lows, let alone a penetration of them.
We keep thinking about the extreme in the number of new 52 week lows on the 10th of October, nearly 90% of all NYSE issues. That was the technical low but the closing price low happened a week ago Monday with several new lows, meaning there were stocks setting new bargain basement deals.
The fallout from Wall Street's selloff is the trading in Asia which is down 6% in some countries. This would indicate that the selloff will continue around the globe back to the US in the morning. Let's see what happens...