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Day Of 2012 Kicks Off First Correction

The market saw its first 90% day of the year on Tuesday, unfortunately seeing it fall to the downside. Does this weakness mean the market is not destined to go too far beyond its 2011 highs, or is this just a minor hiccup in its bullish trend? Our research utilizes various statistics and charts in an attempt to gauge underlying strength.

95.75% of all dollar volume went to declining stocks on the NYSE, with breadth and intensity close behind as about 93% of all stocks and just under 95% of all points fell in the red. Activity was much higher than the past few days, with over 119 billion dollars trading hands on the New York Stock Exchange. While higher than average, this number is still below the 130 billion dollars on February 29th's modest decline. The median return for stocks was a negative 1.97%, compared to the 2.1% drop in the dollar volume weighted average in stocks, alluding to the strong negative skew that can be witnessed in the day's distribution.

The day saw fairly equal performance cheap nike lebron shoes across market capitalization, as evidenced by a mild 17 basis point difference between equal weighted and market cap weighted averages as well as the scatter plot of market caps versus returns. The flat trend line running through the chart suggests that returns were generally the same across market caps.

A small positive to the market's performance today can be seen the the scatter plot of dollar volume for each stock against their returns. Monday's chart experienced a notably negative slope in its trend line, suggesting that more liquid issues experienced larger losses. On Tuesday, however, the story was not the same as the trend line was flat, indicating there was very little difference in returns based upon www.nikeshoesa.com/nike-lebron-c-82/ liquidity for the day.

Our measure of stock market supply and demand, the Daily Bull Bear Indices, took a large hit on Tuesday. The Daily Bear Index (supply) rose over eight percent while the Daily Bull Index (demand) dropped a substantial 7.72%. The Daily Bull Bear Indices are intermediate measures of supply and demand, and still show that stock market demand remains above stock market supply. However, if these lines were cheap lebron shoes to cross the prospect of more intermediate term losses would become more likely. As a side note these indices are calculated using measures of activity, intensity, and breadth for each stock on the NYSE.

For the time being we continue to hold that the intermediate term trend is still positive, while the past few days offers evidence of a modest near term decline. Over the next few days it is likely there is a bit of a rally to Tuesday's intense sell off as lower prices entice buyers back into the market.

If the market is to continue lower and experience a cross in the Daily Bear Bull Indices, strong negative skew and kurtosis, and stocks with higher dollar volume experiencing lower returns (negative slope in dollar volume scatter plot), then an adjustment to our intermediate nike lebron shoes position will be necessary. A key level of resistance to any rally that may occur from Tuesday's low is February 29th's close of 1365 on the S 500, while support to any further correction may lie around 1315 or further down to 1285.