Tuesday, October 20, 2009

Midday Briefing for October 20th: Return to the Multiday Range

With the morning weakness in stocks, we have moved back into a multiday trading range. We continue to see a somewhat elevated number of 20-day new lows among stocks: over 400 so far today across the NYSE, NASDAQ, and ASE. Note how small cap stocks (IWM; above) have struggled at resistance around 62.50. I continue to view the recent action as part of a topping process that will ultimately lead to a break below the lows of the past several days. Especially on my radar: commodity related energy and raw materials shares, which have been market leaders. Should we get a pullback in commodity markets, perhaps as a result of a dollar bounce, we could see that weigh on stocks as a whole.