After a one-day respite, the rout on Wall Street continued Wednesday. This price action was unexpected by most for a number of reasons. First, stocks historically fare comparatively well on short weeks before holidays. Second and more importantly, yesterday’s v-action in prices along with the formation of a hammer candlestick has been prescient in the past in terms of identifying bottoms.  So yesterday’s 32 point rally goes into the books as a head-fake rally with downside momentum still intact.

Even more perplexing and alarming is the rout in energy stocks. Oil is currently at an all-time high above $144/barrel and yet the vast majority of energy stocks are getting pummeled today along with the rest of the market. The good news here is that the value of these companies’ assets and products is going up while the share price is going down. We could be seeing some good bargains in this sector shortly if this action keeps up.