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The market was crushed yesterday. Everything fell and volume was high. Commodities took the worst of the bears' fury.
Oil tanked by 2% and moved below $102. Gold was murdered, and it dropped 3% to start and end the day.
Meanwhile, the dollar and bonds rose. The increase to safety assets is noteworthy and that flow could indicate that a stronger bear trend is coming.
In addition to the woes in basic materials and strength in the dollar, sellers hammered bank stocks. Big banks were big losers during the session. Previous leaders like Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and Bank of America (NYSE: BAC) each dropped by 3%.
I have noted that the market was weakening over the past several weeks, but that a top wasn't in place. Even now, there are few signs of a top outside the weakness in banks and oil. SPX still is holding 1401 support, bonds remain in a bearish trend (although they could be bottoming) and Apple (Nasdaq: AAPL) continues to make new rally highs.
The bears have gotten a lot stronger this week, but it's unclear whether or not they are powerful enough. The market has not felt consistent selling since September 2011. Also, the bulls have done a way better job building support zones during this current bullish rally as compared to other maniacal rallies in 2010 and 2011.
Economic data has also continued to support a bullish stock market. However, recent data has missed analysts' expectations.
The data has been worse overseas. Europe specifically had a string of bad data come out, the most recent of which was that German production fell 1.3% in February. The rate on Spanish 10-year bonds has also climbed and hovers at 5.84%, which is up from 5.5% earlier in the week.
Today, we need to see our leadership groups rebound. That means financials and technology stocks need to outpace the other sectors. It will also be helpful if the SPX can manage to get back above 1401 support before the 3-day holiday weekend.