One more week of such monotonous action, and we may have the record for the least volatile September in history. If anyone keeps records of such things, I'd be interested to know. I can't even imagine retirement being much more boring, but with this lack of action, we may as well all be retired.
Although major indices closed lower, I would hardly consider today a follow-thru to yesterday's drop. Turning points are typically characterized by a contagion of selling. Today felt more like containment. Unless the action turns sharply lower early next week, we may have to chalk up yet another consolidation for this rally.
The good news is that some traders are starting to take bad news to heart. After its downward revision was ignored yesterday, Silicon Labs coughed up nearly 4% in today's session. They were joined by other chip makers with inventory problems such as SanDisk and Nvidia, both of which were discounted more than 3%. Next step: connect the dots between excess inventory and the housing slowdown to see that Joe Consumer will not be there to rescue these companies from overproduction.
Earlier this week, I saw a decent probability that the FOMC meeting would provide a sell-the-news type of catalyst for equities. Clearly, that idea did not unfold, most likely because there is still widespread belief in the soft landing scenario. At this point we bears simply have to keep our eyes on the technicals and hope more pre-announcements reveal what we already know to be true.
Disclosure: Short SNDK, NVDA; Long SNDK, NVDA Puts