Bears Bite Back

Wednesday was quite satisfying for those of the bearish - or, realistic - persuasion. Stocks have begun their summer swoon, as earnings season winds down and investors are forced to make guesses using government-supplied statistics as to the welfare of the general economy.

It's a discouraging time for the perma-bulls, who will buy, buy, buy, no matter the season or the sentiment. The tide truly turned today after seven weeks of a relentless march higher by the indices.

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As noted here a few days ago, the key levels - Dow 13,000, S&P 1400, NASDAQ 2500 and NYSE Comp. 9500 have all been approached and breached to the downside. While retesting the resistance may still occur, it should be noted that the Dow average crossed the 13,000 mark at least 24 times in the past five sessions. By any measure, that area has been tested, retested, probed, dissected, groped, molested and finally worn out.

The indices took one last hard charge to the upside this morning, didn't like what they saw and backed away like scared rodent. With the preponderance of negatives facing the market, a pull-back was not only necessary, but healthy. Investors need to be taking short-term profits, stocks need to be resettled, distributed and a base needs to be formed. If there is a bottom to the so-called "recession market" it will be during this summer. If there is no bottom, it will just continue to go lower until the proper adjustments are made.

Dow 12,814.35 -206.48; NASDAQ 2,438.49 -44.82; S&P 500 1,392.57 -25.69; NYSE Composite 9,339.47 -171.51

The internals tell the real story. Declining issues outpaced advancers, 4494-1757. New lows maintained their edge over new highs, 206-161.

Oil didn't help matters any, hitting another new high of $123.63, up $1.69. The price of a barrel of crude has doubled in just the last 12 months. Interestingly, other commodities did not hitch a ride. Gold slipped $6.50, to $871.20. Silver fell 17 cents, closing at $16.70 the ounce.

With two days remaining in what will be seen as a turning point week for Wall Street, stocks will need to rebound sharply to avoid what looks like the beginning of a long declining trend.

NYSE Volume 4,076,269,750
NASDAQ Volume 2,293,964,000