This morning before the open in my MorningWord I suggested that the price action of the March 6th sell off may be fairly instructive for today’s price action. March 6th had a 2011 feel to it as European equities got worse throughout the day (barely saw an uptick), while the DAX closed on it’s lows down about 3.5%. Today the DAX also closed on the lows down about 2.84%, also with barely a bounce (chart below).
On March 6th, the SPX closed down about 1.5%, it opened down 1% and then traded down about 2% and then closed 50bps off of the lows. Unfortunately for my shorts, I had a sneaking suspension that the S&P may show some relative strength today and trade similarly as to the way it did on March 6th. If u overlayed the SPX chart from the 6th to today you would see a very similar pattern, today we opened down about 90bps went down about 1.4% and then closed down about 1% for the day.
I have a striking suspicion that AAPL‘s nearly 1% rally off of its lows of the day today had something to do with the late day relative strength, too bad the DAX doesn’t have any AAPL!
It’s also interesting to note that on March 6th AAPL opened down about 3% only to close down on the day about 50 bps (chart below).
Make no mistake about it, today should have gotten a bit sloppy on this side of the pond, and it didn’t which doesn’t come as a huge surprise to me, and a main reason why I didn’t want to press a down opening……Some sectors didn’t show much of a bounce like the banks, with most trading near the lows of the day, while stocks like CAT which have already been down about 9% off its 52 week highs made last month spent most of the day rallying off of it’s morning low to actually close up on the day.
SO WHAT TO DO NOW? I want to see Europe bounce a bit tomorrow morning, have SPX up 30 to 50 bps and then try to lay them out from the short side and get a low volume sloppy sell off into a long holiday weekend, so there u have it, that’s the answer key!