Was Today Real Fear Or Aggressive Profit-Taking? Or A Combination Of Both?

The most positive thing you can say about the action today was that we've "needed" a good correction for a while -- and we've certainly had one. A bounce in the last 20 minutes of trading kept us from closing at the lows, but that was a very minor positive in a sea of red. Volume was very heavy, with the Nasdaq doing over 2.9 billion shares, and breadth was better than five-to-one negative. The only group in the green was pharmaceuticals, a traditional safe haven for those mutual funds that can't carry too much cash.

As I discussed last night, the recent volatility was a sign that indecision was growing and cracks were appearing in the uptrend. All it took to push this market over the edge was increased fears about European sovereign debt - egged on by ridiculous CDS - just pure manipulation, as nearly all playing in that market do not have a real stake in the underlying. There are seemingly major concerns that the problems in Greece might not be fixed that easily and are, in fact, spreading to other countries, such as Spain and Portugal. The end result was some of the worst action since this rally began back in March 2009.

Some of the same bulls who told us that sub-prime mortgage lending was not a problem a couple years ago are quick to reassure us that Europe isn't going to be a problem either. We shall see, but the price action today may indicate there is some real fear out there - or at least some profits to protect....However, I would not be at all surprised to see this worry and concern about Europe expand in the near term.

Back in January and early February, this market threatened to break down in a similar manner. At the time, I thought it was highly unlikely that we would pull off another V-shaped bounce back to new highs. I was dead wrong about that and am hesitant to make the same prediction again. Nonetheless, this market is definitely seeing a change in character, and that suggests we aren't going to fly right back up. Keep an open mind about that possibility, however. Some are saying to protect one's capital; I, for one, basically doubled my position in AAPL today - it's quite cheap.

long AAPL