On Monday’s opening, after a four-week decline and a loss of about 16%, bargain hunters jumped on blue chips and high-quality technology stocks. But the gains quickly vanished as sellers piled on the financial sector on rumors that Goldman Sachs’ (NYSE:GS) CEO had hired an attorney in advance of possible charges by the government.

Note the break of a double-bottom in the Financial Select Sector SPDR (NYSE:XLF). The break, coupled with a new leg down in the stochastic, is telling us that the financials will probably not hold at current levels.

In the financial press this weekend, several analysts were quoted as saying  that last week’s high-volume selling was the long-awaited selling climax, and so it is possible that a bottom was made. But Monday’s failure, following such a strong opening, is a sign that institutional investors are not yet ready to make long-term commitments, even at these depressed levels.

This negative development was confirmed by the CBOE Volatility Index (VIX), which closed very close to its highs of last week, indicating that the high-volatility cycle is not broken.

Since many technicians were looking for a strong bounce from the recent lows, the anticipation of a rally may have contributed to yesterday’s strong opening. But the failure to hang onto the gain now puts renewed pressure on the reversal low of the S&P 500 at 1,101, as well as the Dow Jones Transportation Average’s closing low of 4,222 mentioned in Monday’s Daily Market Outlook.

The transports closed yesterday at 4,226, up just 4 points. The penetration of these numbers could result in the final high-volume sell-off, but the target is still at least 7% from yesterday’s close at somewhere between S&P 500 1,015 and 1,045.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

• See Serge Berger’s Daily Market Outlook: Almost Time for a Bounce?
• See Sam Collins’ Trade of the Day: Silver Shows No Signs of Stopping
• See Serge Berger’s Trade of the Day: A Powerhouse Energy Stock to Buy