A Change in Character

 | Jan 26, 2012 | 4:28 PM EST
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It has taken 17 days of trading, but we finally had our first day of real selling in 2012. Euphoria over the Federal Reserve's zero-percent interest-rate announcement continued early on, but we topped out in the first 30 minutes and then traded down the balance of the day. We closed near the lows for only the second time this year.

Even though it was the poorest day of the year, it still wasn't that bad. Breadth was only slightly negative and the point losses were mild. The biggest negative was that we had an intraday reversal to the downside after a strong start, which is a change in character.

Whether or not this turns out to be a short-term top will depend on the dip buyers. They have supported this market diligently and that typically doesn't end swiftly. There usually comes a point, however, when the weakness is bad enough to cause the dip-buyers to lose confidence, and that is when a more severe correction develops.

We have quite a few earnings reports rolling in, but most of the major ones, with a few exceptions like Amazon (AMZN), are done, so there are few major market catalysts remaining.

The Fed is back on the sidelines, but Europe could become an issue at any point. We are still technically extended and in need of further consolidation, but the bulls haven't given up yet, although they did weaken a little today.

Have a good evening. I'll see you tomorrow.

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