I know the bears were hopeful, but did they really think it was possible for this market to go straight down on poor news from CSCO? This market just has too much underlying support and too many willing dip buyers for it to go straight down. Bad news for the bears. Cisco is just another dip-buying opportunity.
We trended up pretty steadily all day after the poor open this morning, but an early release of poor earnings from DIS prevented a close at the highs. None of the indices were able to make it all the way back into the green, but the intraday recovery was certainly quite strong.
Volume picked up quite a bit in the Nasdaq due primarily to the surge of trading in Cisco, but that gives us our second day of technical distribution this week. Coal, oil, gold and commodity stocks led even though the dollar was stronger. Banks and chips were the laggards, and that isn't what we want to see.
Once again, tops are processes that play out over time as we bounce around and the bulls slowly lose their confidence as they fail to see further upside. We have a few negatives developing (two distribution days in a week), but so far we are holding quite well, and the bulls don't look like they have had their confidence shaken too badly. We have to stay very vigilant and heed any further fractures in the action, but the dip buyers are doing a heck of a job and you can't count them out until they actually have a failure or two.
It is very tempting to want to call a top here, but we just aren't seeing enough selling pressure to turn the tide. The uptrend is still intact. Although we had three down days this week, it hasn't amounted to anything more than healthy consolidation so far. Things could change and the level of complacency is worrisome, but the bears still have the burden of proof.