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Understanding that nobody knows anything, the Dow did happen to lose another 213 points, the second straight day of triple-digit point declines. That hasn't happened since late October. Now, there was a lot of news today that would understandably upset Wall Street (Obama's banking plan, a possible reining in of China's growth machine, a strong but not spectacular earnings report from Google). Given the patterns of the last few months, it's entirely possible that the bulls will gather themselves over the next few days. But if you follow the market's technical analysts (folks who make their livings trying to interpret charts like the one above), there is some reason for concern. Mutual fund co-manager Michael Kahn posts this on Barrons.com:
Starting just last week with Intel, the market reacted to what was called very good earnings news by slapping the stock lower. The same happened with other market bellwethers such as IBM Wednesday and Goldman Sachs Thursday. In technical theory, bad reactions to good news are bearish warnings. The question now for investors is whether this is merely another hiccup in a bull market or the start of the long-awaited correction. Given the market's tendency to set a low at the end of each month since last summer, we have to give the bulls their chance to recoup. Indeed, bulls have used these selloffs to buy, limiting pullbacks to just a few days. But with earnings season leaving us cold technically and with a rotation of money from risk assets to safety assets this time we cannot assume buyers will step up again.
One non-technical explanation for the two-day slide: So many companies have been reporting strong earnings that investors are marginalizing the good numbers and looking for other things to worry about - of which there are many. Yeah, I know it sounds goofy, but that's the explanation making the rounds.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.