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In focus: Bears fight back

By Lawrence G. McMillan

The market has had some very volatile short-term moves in the past few weeks. A strong rally over the past week gave way today to one of the largest down days in quite a while.

The catalyst was some negative economic data (Schiller housing index made new lows, and — shock! — unemployment is still a problem). It’s hard to imagine that either of those is really that much of a surprise, but they certainly started the ball rolling downhill. Of course, selling begets more selling as traders all try to squeeze out the exits at once. That has created a 90% down volume day. What didn’t happen was the seasonal, first-day-of-the-month buying that we normally see.

So now, the Standard & Poor’s 500 Index SPX -2.28%  is back at 1314, having peaked near 1345, which was the area that we feel would demarcate between a continuing bearish SPX chart (which is what we have) and a more neutral one (which did not come about). Support is at the multiple lows of last week — between 1310 and 1315. It has been a quick round trip.

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