It should come to no surprise that financial stocks are causing more and more fear in the market. However, this fear is not showing up in the form of the VIX or VXN. These two indexes are not showing traders are worried that we have not seen our lows. Volume eased on the NYSE while the NASDAQ saw volume rise notching a distribution day for the index. NYSE indexes have 4 distribution days while the NASDAQ has 2. When indexes see 5 or 6 days of distribution it spells trouble for the most recent confirmed market rally. At this point, all we have is a low volume confirmed market rally where we have seen very little accumulation since the first few days after the follow through day. This market This market continues to look really weak and its best not to be “all in” at this point.

New Highs continue to be dominated by New Lows and we have yet to see any type of fear from VIX and VXN. Too many believe we have bottomed and that the worse is behind us. I am not in that camp, we have yet to see Pay Option ARM securities and commercial loans being written down. In addition, the global growth story is all but dead for awhile. With the Shanghai losing more than 60% of its value in a years time and negative GDP numbers out of Europe and Japan will only spell more trouble for emerging markets. Although, in 5-10 years out we’ll see these markets rebound, but the near term is not looking positive.