Weak action has been rare in 2012, but today we saw no real bounce, extremely choppy action and a poor finish. Once again, the indices didn't lose much ground, and there still hasn't been a day with a loss greater than 1%. But the bulls are struggling a little more, and one has to wonder if folks are slowly inching to the exits.
Markets generally don't fall apart suddenly after making new highs. Tops are processes that play out over time. The dip-buyers lose some of their energy, the momentum cools off and the complacency is slowly replaced by nervousness. Underlying support needs to be tested a few times before it weakens and we see more aggressive downside.
I don't want to suggest that a reversal is inevitable, but there are warning signs that we need to pay attention to just in case they develop into something more problematic. We still have not seen any major breach in the uptrend, but the market is obviously losing energy, and weakness in financials is another issue to consider.
Big-caps such as Apple (AAPL) and IBM (IBM) are doing a good job of holding the market up, but the action in small-caps and the relative strength in precious metals suggest that a change in market character may be developing.
Have a good evening. I'll see you tomorrow.
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