The Not So Snappy Snapback Rally

Thus far the rally has been less spirited than what I anticipated. There is a reason they call it a "snapback" rally, but that reason is not apparent today. I believe there are two main reasons for the lethargic action. The first is that there are signs of liquidations happening in certain sectors and the second is investors seem to be fighting this rally.

Chinese stocks have completely imploded. At first it was the second and third tier names but SINA and BIDU have recently fallen out of bed as well. This has carried to other momentum names as well that are not even Chinese but have similar growth ownership. The financials have also been under severe pressure, although they do seem to be stabilizing. I believe these liquidations will make it hard for the rally to carry very far.

We are once again seeing put activity and there seems to be a general distrust for this market. I believe this is a positive for the market in the near term as these counter trend rallies generally tend to end once they are embraced.

All in all I believe  that this rally likely has further to go but that it won't be up, up and away.

5 comments:

Anonymous said...

In my experience, most of the time the first up days still have heavy sellers. Never convincing
it could go higher. What is encouraging  there is a selling wave since 2:50 and all those shares are being eaten up. The wild card is Bernanke at 3: 45 but pretty sure he will be careful what and what not to say. I d like to see the next intraday buying wave effect on the SPY.

Tsachy Mishal said...

The first day of a counter trend rally generally has more oomph than this.

Anonymous said...

No matter how ridiculous as always is,  its time for the market to climb the wall of worry".

Anonymous said...

I think this time many more out there selling the bounce. What was impressive 2 huge sell programs past 15 min :  -1255 and -1355 and the market took it well.

Anonymous said...

IMO    this speech is not helping so far....