When market does not behave as expected, it indicates the market is very weak. Coming in to last week almost all mean reversion kind of models were indicating a possibility of a bounce. Even the worst moves in bear market are punctuated by counter trend rallies. However this market has failed to put together a bounce. Instead we are getting continuous selling.
As selling persists the breadth is deteriorating slowly. That is the only divergence in this move so far.
Sectors and stocks which were providing some leadership to the market on bullish side have also broken down last week. The health care stocks were considered safe heaven but after the Obama budget plan, they have taken a big tumble. Biotech stocks have also shown number of break downs. The education stocks have also stumbled.
Only 10 sectors were up a small percent in this month. The top 10 sectors by monthly price change currently are:
MG137,Nonmetallic Mineral Mining
MG738,Auto Parts Stores
MG739,Catalog & Mail Order Houses
MG741,Sporting Goods Stores
MG852,Internet Information Providers
The 10 worst performing sector were down on an average 30%.
MG712,Resorts & Casinos
There are currently only 30 stocks with sufficient liquidity which are within 15% of 52 week high.