A downgrade of WFC by a long-term bank bull in the last 45 minutes of trading was timed perfectly for maximum impact. The bulls were looking extremely confident once again as they celebrated further weakness in the dollar, but the downgrade by Dick Bove hit just when the buyers usually begin their last-hour push. That triggered a cascade of selling, and it was too late in the day for the dip-buyers to make a move.
The good thing about a fast intraday double reverse like we had today is that it quickly helps to kill the froth that has been building. A correction doesn't have much impact when it is mild and quickly dismissed. The selling yesterday was hardly a blip, and it did very little to help build up that wall of worry that had been the driving force behind this market's relentless rise.
This is the first late-day selloff we have had in a very long time, and that just goes to show how complacent the bulls have gotten lately. While it is a bit painful if you are holding long positions, it is healthy action in the bigger scheme of things. A little fear will help create some new and better opportunities....
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