Stocks retest the November 2008 lows as Banks continue to get clobbered.

Stocks appeared to have the might to blast through the November lows this morning as the banking sector continues to take on more selling.  However, it appeared the selling effort stalled out as the S&P500 took out the 820 level.  Selling pressure couldn’t sustain itself and buying took over.  Volume was running hot all day, institutional players stepped in on both sides buying and selling.  Day one of an attempted rally, a good sign was the move off the lows on such tremendous volume.  Let’s pause, we need confirmation off these lows in order to rally higher.  Starting Tuesday we’ll need to see the market higher by 1.7% or greater on increased volume.  Better yet, volume better be well above the 50dma to get any sort of prolonged rally.  Wait for confirmation, there are too many dark clouds on the horizon to get overly excited.

This is not a new bull market, but that doesn’t mean we can’t rally.  I have said countless times how we are mimicing the action of 1938.  The low volume bleed back to the retest was awfully similar to that of 1938.  If history proves that its mirrored by the present we’ll more than likely see sustain upside.  I must warn, this market will fail to produce gains that would be seen during a new bull market.  We will not see 1,000% moves with this rally if it is confirmed.  Play the market safe as ultimately this rally will roll right over and eventually those November 2008 lows will be taken out.

Be safe and stay warm!

MS

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