Bearish forces are building

By Lawrence G. McMillan

The broad market is rather schizophrenic right now. On Friday, the prevailing attitude seemed to be “I better buy now before Congress settles this thing and the market explodes.” On Monday, it was more like “I better sell now, because I’ll be able to buy later as this thing drags on” (“This thing” being the Congressional deadlock over the budget and the debt ceiling). In reality, the technical indicators were weak coming into the government shutdown, and they are getting weaker. The action yesterday was very negative near the end of the day, as the market collapsed swiftly after having to tried to rally (weakly) for most of the day.

$SPX closed at a new low since the September highs at 1730. That is negative and should augur for a test of the 1660 level at least. There is resistance just above 1690, where all the rallies of last week died...

This commentary was excerpted from this morning's edition of The Daily Strategist newsletter. Subscribe today to read the full market commentary.