For Bottom: More Despair, Less Optimism

It was a mixed day of action. The small-cap indices traded down all day and the Nasdaq was essentially flat. We closed weak, with Goldman Sachs (GS) leading the way down for the financial sector. Breadth finished slightly negative after a strong showing earlier.

Overall, the buyers just don't have a high level of conviction and couldn't gain much traction even though there was more liquidity injected by central banks.

Interestingly, European stocks stayed strong all day, perhaps because the ECB was more aggressive than the Fed with liquidity.

The biggest negative today was that so many folks seemed anxious to declare the recent subprime issue over with. We gapped up strongly on that hope and then could gain no further traction. There is still too much hope in this market to give us the sort of bottom that comes only when despair is the dominant feeling.

Keep in mind that we are now in a time of the year when many folks want to take an end-of-summer vacation. That could lead to some lethargic trading, and I would not be at all surprised to see the market drip lower for a few weeks, much like it did intraday today. That is going to make it very tough, and it will be important to be patient until we see some clarity in the technical patterns. Have a good evening. I'll see you tomorrow.

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James "Rev Shark" De Porre is the founder and CEO of Shark Asset Management, an SEC-registered investment advisory firm. He also operates sharkinvesting.com, an interactive online community that serves and educates active investors. De Porre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children.Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here to send him an email.