Monday, March 15, 2010

Is A Shakeout Still On The Way?

I guess a correction that lasted for the full day would have been too much to ask of this market. After a bit of profit-taking in the morning, the dip-buyers found their footing after the lunch hour and took us back up close to even for the day by the close. Volume was very light, but we had a different mix of action today. Leadership came from normally stodgy stocks such as WMT, GE and MCD.  Retailers continued to act as though consumers can't spend their money fast enough, but overall breadth was negative. The dollar was stronger, and that weighed on oil, coal, steel and commodities, but gold has come uncoupled from the dollar lately and traded up. I'm sure the buy-and-holders are pleased with how quickly we bounced, but this sort of action sure isn't yielding many good trading setups. We are still too extended and haven't got sufficient volatility to give us better entry points. It isn't easy to load up longs here, but trying to short this market has been far more difficult. Last week a columnist on Real Money talked a little about a quick "whack" to help shake out some of the complacency. I think conditions might still support something like that this week, and I'm keeping a close watch on my long positions. It is a tricky environment, and we have to make sure we stay on guard........

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