The beatings will continue until moral improves

The first Monday back from vacation and greeted with a large sell off. The S&P 500 fell more than 21 points or 1.6%, retracing more than 25% of the short-term rally that began in early June. That rally off the monthly lows was most likely in response to investors growing belief that the Fed would provide their monetary fix. That fix came on June 20th, when Bernanke and company announced the extension of operation twist through the end of year, essentially marking the top of the rally.

I would expect the market to retest the near-term lows below the $130 mark (on the SPY) and begin to discount economic fundamentals more so than any monetary stimulus. Monetary statistics indicate the economy has slowed to a crawl and may have (will) experience a mini-recession. That said, I am encouraged by the rebound in the annualized 3-month growth in M2 and MZM. More later.

My investment portfolios took a hit yesterday with coal stocks down significantly (although I would note that in the coal stock space investors should expected volatility +)

The KOL ETF looks oversold on a stochastic basis and the RSI and price trends have diverged, a mildly positive indicator in my book. Of course, the question is why do I own these names when they have been decimated. Well again, more on that later.