Nasdaq Stays Strong

Bank rumors and speeches from Bernanke turned a positive start to the day into an afternoon selloff. The Dow and S&P 500 lost all of their gains but the Nasdaq went virtually unscathed, with the Nasdaq 100 finishing over 1% higher. I looked back at all the times the S&P closed lower while the Nasdaq 100 closed at least 1% higher. Below are some summary statistics:

Additionally, about 86% of these instances closed higher than the trigger day close sometime in the next week.

You may also notice that some sentiment gauges like the put/call ratio and the VIX have spiked a bit in the last few days. Traders seem to be getting a bit jumpy. Compare this week’s selloff to the one two weeks ago and you’ll see the indicators spiking just as sharply or more so even though this selloff is more benign. That is generally a good thing.

Most everything I’ve been looking at since Monday says we are likely to bounce. There seem to be a few wildcards to keep in mind, though. The banks are one. They need to halt their freefall. Friday’s unemployment report is another. Markets tend to react to that report more severely than most.