Market Retreats Again

Fundamental Take:
The market dropped 89 points today as healthcare stocks sustained steep declines after Obama laid out his long-term budget. Included in his savings are cuts to the "waste" in healthcare which investors fear will hurt the profits of medical companies. The healthcare sector dropped 4.8% as Obama's plan calls for cuts to Medicare payments to insurers and raises the required rebates to Medicaid patients from drug companies. The Federal Deposit Insurance Corporation released its report on US banks this afternoon increasing the number of troubled banks from 171 to 252 banks and sees the risk of bank failures has risen. Yet, in the face of this report banking shares outperformed the market gaining 1.6% on the day.

Technical Take:
Today continued with the market's rangebound action. Stocks gapped higher on the open and traded up over 200 points throughout the morning. From the morning high the market trended down through the rest of the day frustrating the bulls as the S&P pulled all the way back to yesterday's lows. The market is rangebound giving back eleven inches for every foot gained. The head and shoulders pattern on the S&P 500 has not properly triggered yet as the market has not been able to sustain a move and close above the 780 level. The S&P closed on the lows of the day 10 points off the bear market low. I will look to buy support once again tomorrow but maintain the flexibility to short a break of 741 on the downside.