We had a decent bounce back to the opening highs, but rolled over with Standard & Poor's downgrade of eurozone countries. The news was expected, but after eight days of upbeat action to start the new year, we were due for a rest and this was a good excuse for one.
Now that the news is out, the issue is whether market players want to buy in front of the blitz of earnings reports that start rolling out Tuesday. As I discussed this morning, expectations, as reflected by the market action, are quite high despite the largest number of warnings in years.
The recent market action has already created a good supply of underperforming investors, which explains all the dip-buying. No one likes to lag the market, and the easiest way to play catch-up is to buy favorite stocks aggressively when there's a pullback.
Technically, the indices are still in good shape and today's action isn't a negative. In fact, it's probably healthy to take out weak holders and let the charts reset a bit.
I'm doing very little and don't plan on any late buying. There are some items on my shopping list, but we haven't pulled back enough to make them compelling, and we obviously aren't strong enough for any momentum.