For the second day running, major averages were unable to sustain a rally. The afternoon weakness was most evident for the Dow, which finished down 0.9% to 8711.18 after trading as high as 8862.58. The S&P 500 ended off 0.4% to 949.64 vs. its intraday high of 962.08. The Nasdaq fell from its high of 1591.30 but closed up 0.7% to 1574.95.
We really need more of a correction than we’ve seen so far. A correction will reduce some of the excess. A correction would be bullish, not bearish. Without more of a pullback, it will be hard for this market to set the stage for a sustainable upside move. And if we keep going higher without a correction, it just means that the inevitable decline will be more severe.
Today is the last day of the month, which means that there could be end of the month window dressing. In other words, there is a tendency at the end of the month and especially at the end of a quarter, for portfolio managers to get rid what’s not hot and get into what is hot so that they can show the world that they’re in the “right” stocks.
This is also Commitments of Traders report day. Will the smart money make it ten weeks in a row? Stay tuned.