Although the indices continue to hold up quite well, we have had weak intraday action for six days in a row. Today there was classic gap-up failure but late buying helped to contain the damage. The markets have closed lower than they opened for four of the last five days, and well off the highs for six straight days, which is a sign of waning momentum.
We had the additional negative today of relative weakness in the high momentum names. Overall, breadth was quite solid with about 3200 gainers to 2400 losers, but it was the stocks that have been leading lately that lagged badly today. Names like NFLX, TZOO, MCP, OPEN and PCLN were unable to attract much dip-buying interest today, although they have been leading the market lately.
There hasn't been much interest in bottom-fishing for a while, but it was financials and CSCO that led the market today. Buyers were still active, but they were rotating into some groups that they have ignored for a while. It is a good sign that the buyers didn't just head for the sidelines, but I don't expect these stocks that are bouncing from the lows to see sustained interest.
The character of the market has been a bit different over the past week or so. Although the indices haven't pulled back much at all, the intraday action has looked lackluster. It could just be a healthy pause, but the risk we could start to drift lower is increasing.