Gap Up. Gap Down. Gap Up. Gap Down.

Risk On. Risk Off. Risk On. Risk Off.

Wax On. Wax Off.  Wax On. Wax Off.

The bipolar market with the attention span of a flea, and no memory from day to day, continues.

Each day is its own entity without memory of the last.  Twice in the last 2 weeks (including Monday) have we had nasty intraday reversals down in the closing hour (which are traditionally bearish for the next day), only to be forgotten by the next morning as premarket magic makes everyone forget.  Weak retails sales Friday were forgotten within an hour as the market regained all losses.  The weak unemployment data was forgotten in 2 sessions.  We've now had something like five 2.5-3% rallies in single days in the past 3-4 weeks.  Within a greater downtrend no less.

As I said yesterday today was the one day the economic news could actually matter and thus far it has.  Housing starts have faltered as the handouts by government slow down (no surprise), and a disappointing guidance by FedEx is also not helping.  Overseas we hear Spain (after denying it would request any help) might be tapping an emergency line.

  • El Economista reported the International Monetary Fund, the European Union and the U.S. Treasury are putting together a credit line of as much as 250 billion euros ($307 billion) for Spain. 

The U.S. Treasury?????? This could all be a rumor but if the U.S. Treasury is going to be involved in backstopping foreign countries (a) you know our issues are so much larger than officials let on and (b) oh baby, the U.S. taxpayer needs to raise a fuss.  But let's hold off before passing judgement.

All that said.... it can all be forgotten by tomorrow morning since the market will forgot has no memory from day to day.

We peaked our head over the 200 day moving average yesterday, and of course this will continue to dominate - today's gap down will need to hold S&P 1108 by the end of the session.  If it does, nothing today matters since our memory no longer lasts more than 24 hours.  Big picture, if the 200 day moving average holds all dips are 'buying opportunities' and if not, you should be selling long exposure into the gift the market has given.  As an aside, yesterday's volume was particularly weak - continuing the tradition of rallies on weak volume, and selloffs on heavy volume; another anomaly of the past few years.