Thursday, May 20, 2004

Yesterday's reversal was disappointing, no two ways about it.  Pick whatever excuse you wish for the selloff, traders had every opportunity to run with the upside but backed away, and that is not good in the short-term.  It is hard for me to imagine that we reverse yesterday immediately, and I think it more likely now that we will revisit and probably break the recent lows. One positive, other than those I've pointed out recently, is the action from Rydex traders.  They were shorting into Tuesday's rally, and shorting even more heavily on Wednesday's very mild decline ("mild" in terms of close-to-close).  This type of pessimism from this group is normally a good contrary indicator, but again I don't think yesterday's ugly, ugly day will be reversed immediately. 7:49:50 AM