As I have posted from to time, market direction may be more influenced by external circumstances than internal ones. That proved to be true yesterday, as another early morning sell off put the major indexes in a hole again.
A stronger dollar, supported by ongoing European debt problems, put the bears clearly in charge. The bulls staged somewhat of a comeback because of encouraging consumer confidence and manufacturing data. Disappointing was the Case-Shiller Index that showed house prices falling in September.
Getting the attention of the markets was a newly opened antitrust investigation by the European commission alleging that Google has abused its dominant position in online search. That kept a lid on any rally in the technology sector.
Another market worry for financial stocks were reports that WikiLeaks plans to release tens of thousands of documents from a major U.S. bank early next year to expose “an ecosystem of corruption.” Not really a warm and fuzzy feeling for the banking sector.
While today’s rebound attempt fell short, I have to wonder how many more times will bullish forces come to rescue before the bears finally gain the upper hand. The market looks very toppy to me and seems to be in need of a new driver to break through to a higher level.
I am not sure what that could be but, as long as international events (Europe and Korea) dominate the headlines, we may be stuck in a trading range for a while.