Another Leg down for Stocks; BTFD or Correction Coming?

As a fllow-up to Tuesday's dip into the red, stocks could not forge into positive territory on Wednesday, as the NASDAQ suffered its first three-day losing streak since August 2nd, and the other major averages fell in unison.

Losses were not deep, but steady throughout the afternoon session, closing near the lows. Topping concerns was renewed tension in Europe where protests in Spain overnight and in Greece during the day turned violent.

In Madrid, youths turned out in large numbers to protest parliament's ongoing forays into austerity and to voice anger of the 50% unemployment rate plaguing Spanish youth. Police beat protesters with batons and scores of arrests occurred.

Greece's protests were union organized, as many as 200,000 people from the largest public and private unions marched through the capitol. The demonstration was largely peaceful until anarchists began throwing molotov cocktails at police and media stations. Police responded with tear gas and pepper spray.

By comparison, markets were less jittery in the US as compared to Europe, where Spanish stocks slid by more than three percent and the majority of developed nations' bourses suffered losses of between 1.5 and 2.5 percent.

Commodities were also hit, with gold down sharply and oil closing below $90 per barrel for the first time in more than two months. Silver, which slipped nearly one percent in early trading, rebounded to finish the day close to unchanged.

Losses in risk assets prompted questioning over whether the Fed's new QEternity policy would be effective in boosting or maintaining asset prices in the near term or whether the global economies might be sinking further into a condition of malaise and ill-investment. Some analysts saw the pull-back as technical in nature; others thought a correction was overdue and about to commence.

That left traders in a quandary over where to move next: either out of stocks and back into bonds, or, to stay invested in equities.

Sadly, most people being sheeple, risk assets such as stocks are likely to remain in favor until a more robust, sustained devaluation takes place. Such a scenario could very well play out within the next two weeks. The third quarter is quickly drawing to a close, though the overall strength or weakness of the US economy cannot be measured accurately by the stock market.

Anecdotally, new home sales failed to meet expectations, another cause for concern on Wall street.

Hey, it's only money.

Dow 13,413.51, -44.04 (0.33%)
NASDAQ 3,093.70, -24.03 (0.77%)
S&P 500 1,433.32, -8.27 (0.57%)
NYSE Composite 8,221.75, -53.03 (0.64%)
NASDAQ Volume 1,725,565,750
NYSE Volume 3,535,526,250
Combined NYSE & NASDAQ Advance - Decline: 2145-3341
Combined NYSE & NASDAQ New highs - New lows: 136-48
WTI crude oil: 89.98, -1.39
Gold: 1,753.60, -12.80
Silver: 33.94, -0.01