Slow and steady; can weigh heavy

The stock market put in another water torture down day. With the exception of Altria (symbol: MO) there was really nothing good for the Bulls to sharpen their horns with. Breadth was negative on both the NYSE and the NASDAQ. The volume however, was light which seems to have broken the pattern of heavier volume on down days and lighter volume on up days. This could simply be a function of overall lack of interest due to the summer doldrums or perhaps a slight positive indication that some of the selling is drying up.

Even though it would be a positive for the selling to slow down, the lack of buying interest is of a larger concern. We believe it has been the lack of bids that has allowed this market to slowly drift into this ugly downtrend.

We have mentioned before in prior posts that slow downtrends tend to last much longer and fall much further than people would expect. Traders become painfully aware after a long drift down, when prices are already low that the whoosh is still looming. Those are the moments when the market is truly not for the faint of heart. It is usually better to have a sharp Cliff down which tends to be quick as opposed to a long drawn out process that accelerates into ultimately much lower prices.

If You Held A Taser To Our Head: Gap (symbol: GPS) had a weak report after-hours but Marvell Semiconductor (symbol: MRVL) was strong. We do not expect MRVL to provide a sustainable lift to the NASDAQ in sympathy with its MARVELL-ous report. Any NASDAQ strength will invite greedy short sellers.

-See you tomorrow-

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