The buyers showed some unusual patience today and actually let the market sell off for about 90 minutes before they did a little buying before the close and took us off the lows. The S&P 500 still hasn't pulled back more than 1% for the 43rd day in a row, but breadth was weaker, volume was heavier, and we had a technical distribution day.
Just no volatility lately. Strong trends make for great trading, but many traders out there have never seen a market that has provided so few "entry points" along the way. Even back in the bubble days of 1999-2000, we had more downside action on some days than we've seen in this market.
The little bit of selling we had this afternoon relieves some of the overbought pressure and helps give the traders some better opportunities, but in the bigger scheme of things, this selling doesn't even qualify as a pullback. It is nice that we have some variety in the action, but it is too early to conclude that it is foreshadowing what is yet to come.
The danger in a market that hasn't had a pullback in such a long time is that we'll be tempted to be overly bearish when we finally do have some selling. If a significant top is forming, and it is premature to say so, then we're going to see a pretty good battle between the dip-buyers and the bears before we roll over. Too many people missed this move, and they are going to be inclined to buy weakness here. It is going to take a while to scare the underinvested bulls away, and with earnings season rapidly approaching there will be some new catalysts at work as well.
Playing defense at this point wouldn't be a bad thing.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment