It has been one of those days where buyers just aren't interested in the dip and staying on the sidelines. Dip-buying always sounds like a good idea when the market is going up, but when stocks are weak there is always concern that maybe this isn't just a brief respite before the rally continues.
The good news is that the action seems to be caused more by a lack of buyers than aggressive sellers. Breadth is poor and there is plenty of red, but it doesn't feel like there is panic or a big reversal in sentiment.
From a contrarian standpoint the media excitement over the DJIA hitting 14,000 was classic. It is exactly what you'd expect to see when the market is close to a top. We've had a great run, and now the folks in the media start talking about whether the individual investor is coming back. Given how poorly they have timed the market in recent years, I'm not sure we should be feeling good about retail bullishness. On the other hand, I suspect it is more a figment of the imagination of the media than anything else. I still see very few signs that the individual investor is charging back into the market.
I've been doing very little today as I watch to see how this selling plays out. The two weak days last week had me more cautious, which put me in poor position for the surge on Friday, but we've now given back all those gains and I'm starting to wonder again if a topping process may be developing.
My stock of the week is Netflix (NFLX), which is acting quite well. It has short-squeeze potential and is attractive to momentum players, which is why I picked it. I'll be looking to add on a good close today.