Same Old Song

 | Jan 31, 2012 | 7:44 AM EST  | Comments
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If we wait for the moment when everything, absolutely everything is ready, we shall never begin.
-- Ivan Turgenev

It has been a while since we've had a "Greece is saved!" rally, but we have a decent one kicking in this morning. It is the same old news that a deal with creditors will be finalized soon, but that is all that is needed to attract some buyers this morning.

There also is talk that Portugal is heading down the same path as Greece, but if we can keep bouncing back every time Greece is about to be saved, then maybe we can rally a dozen times as Portugal is saved as well. At the moment all that matters is that there are talks and meetings and potential deals in Europe, and that pleases the market.

So after three weak days in a row, can the market regain its footing and run a bit? Although we have lost a little ground recently, we continue to see some very strong underlying support. The bears have had some chances but are unable to dig a claw into this market. We had an intraday reversal and a trend-down day last Thursday, but on Friday and Monday we bounced back and closed at the highs after gapping down. That helps to produce some squeezes, keeps the bears at bay and drives the underinvested bulls to put money to work. This "wall of worry" action is holding the market up well.

The other positive aspect of three days of weakness is that we have worked off some of the overbought conditions and are building some support from which we can work higher if the bulls can generate some momentum again. We haven't seen a lot of strong momentum so far. In fact, one of the problems with the market action so far this year is that our big gains have come overnight and we haven't gained much additional momentum after the dip-buyers move us back up to even. We have great support, but the buying has had a tendency to taper off as we move into the green.

The market doesn't look bad here, but I'm still not finding many appealing chart setups. There are always a few charts of interest, but solid bases with big-volume breakouts that aren't too extended are tough to find. As a result I end up being more a daytrader than I'd like, as I have to work hard to put cash to work intraday and don't have the resolve to hold for long.

Over the past couple years, it's been hard to trust the market even when the technical are looking bullish. The big macroeconomic concerns are always in the back of my mind. I deal with that by using shorter-term time frames. The downside is that I will too often sell good stocks prematurely and then will have to work hard to try to put money to work again. I'm always looking for new buys, and the market conditions seldom make it easy.

So once again I'm back in a familiar position. I'm not bearish, but I'm not heavily invested and I don't see a lot of great charts. I have a few things on my radar I'll pursue once trading starts, and I'll be digging hard for more opportunities, but loading up and riding dozens of positions like we used to do all the time seems unlikely.

Lately the market hasn't done very well when it gaps up to start the day. Traders know that, and I'm looking for them to try to fade this open -- but, as we know, the dip-buyers are likely standing by and ready to act on any weakness.

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