Even though important ISM Manufacturing data slightly beat expectations everything else about trading on this Monday fit our headline well. Stocks continued to sell-off hard on a lack of confidence emanating from Europe (Greece...again) and very worrying declines in Bank of America (BAC), Morgan Stanley (MS) and, just for good measure, American Airlines (AMR). The price action continues to send a message another shoe, or pairs of shoes, will drop on investors.

Protests are taking place regarding BAC mortgage policies and their website must be under siege as online banking is frozen. This can only exacerbate the negative mood. The so-called anarchists/communists occupying Wall Street is probably a sign of things to come as conditions deteriorate and competing mobs may confront one another on the streets.

AMR's troubles came out of the blue as rumors of bankruptcy were in the air and the stock was down nearly 35%.

Stocks slid globally and are entering bear market conditions. In fact, most European markets are already seeing bear market conditions as well as some U.S. sectors. The dollar rose on a flight to safety as did gold and silver. Bond prices were also higher while other commodities remained weaker including energy and base metals with only grains exhibiting some strength.

Volume was much higher than previously and it's not surprising given mutual fund redemption requests no doubt accumulated over the weekend. Breadth per the WSJ was no doubt a 10/90 day.

ETF Digest subscriber and pal David Hurwitz provides even more detail below:

 

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Continue to U.S. Sector, Stocks & Bond ETFs

Continue to Currency & Commodity Market ETFs

Continue to Overseas Sectors & ETFs

The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.

Continue to Concluding Remarks

The better ISM Mfg Index was better than expected (511.6 vs 50.5 and prior 50.6) meaning there's growth but it's mild. Investors' concerns are still from the euro zone with contagion fears spreading to U.S. banks. How much exposure they have is the big question. This is what centrally planned economies offer--failures to address problems honestly, quickly and putting them in the rear view mirror. So what we have instead is BS and a lot of it. Transparency is missing and even as difficult as the truth may be sometimes it's just better to get it all over with and move on. Protecting losers is a poor strategy and policy.

Keynesian policies have failed and perhaps are just corrupted by the political process and cycle not to mention undue influence from Wall Street.

As of Monday, the major indexes are only a few points away from bear market territory with lesser indexes and sectors already in bear markets. That's the way it is period.

Let's see what happens.

Disclaimer: The ETF Digest maintains active ETF trading portfolio and a wide selection of ETFs away from portfolios in an independent listing. Current positions if any are embedded within charts. Our Lazy & Hedged Lazy Portfolios maintain the follow positions: SH, EFZ, EUM, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, EWD, GXG, THD, AFK, BRAQ, CHIQ, TUR, & VNM.

 

The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell any security.  Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period.  Chart annotations aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com .

 
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.

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