Given short to mid-term oversold conditions, it’s no surprise markets would try to rally. Even a late day “stick save” didn’t seem that impressive. HFT trading picked up to spur a rally but that kind of late day action isn’t necessarily durable. After all, as these traders would advise, “it’s just a squaring up and/or short-covering trade”.

Crude oil prices fell once again as traders feared fresh supply with Iranian oil now being sold to an oversupplied market. Those fears seemed strange given that this supply was already well-known to be coming.

Market’s leadership higher was confined to beaten down Emerging Markets and China on hoped for stimulus from the latter. The Shanghai CSI 300 Index jumped nearly 3.0% as crummy economic growth, down to 6.8%, may reward investors. Sometimes bad economic data is just that…bad.

Market sectors moving higher included: Consumer Staples (XLP), Utilities (XLU), Emerging Markets (EEM), Europe (IEV), EAFE (EFA), China (FXI), Russia (RSX), South Korea (EWY), Taiwan (EWT), Australia (EWA), and many sub-sectors in areas already listed.

Market sectors moving lower included: Energy (XLE), Oil & Gas Exploration & Production (XOP), Homebuilders (ITB), Small Caps (IWM), Biotech (IBB), Banks (KBE), Regional Banks (KRE), Retail (XRT), Materials (XLB), Crude Oil (USO), Natural Gas (UNG), Gold Miners (GDX), High Yield Bonds (JNK), Investment Grade Bonds (LQD), Brazil (EWZ), India (EPI), Italy (EWI) and many others.

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

Volume was once again heavy and breadth per the WSJ remained negative.

Markets rallied at the open Monday as China data its markets and Emerging Markets on the belief the government there will add fresh stimulus. But it didn’t take long for bears to see through this mirage to start selling-off until a late day rally put some lipstick on the action. Nevertheless, breadth was again weak adding to oversold conditions.