The market continues to see very impressive underlying support. We may not be generating much upside, but the bears still aren't having much luck with the downside. Volume is light and breadth around flat, with oil and energy leading once again. Precious metals and solar energy are the laggards.
The bears' primary argument right now is that higher gas prices are going to matter, but the way retail and restaurants are acting, consumers don't seem overly concerned. The restaurant group is usually quite sensitive to gas prices, but so far there is little weakness. When restaurants start to struggle more, we'll know that gas is an issue.
While I am paying attention to the bearish arguments, my approach to this market is to not act on them until I see some proof that they matter. We've had the same negative arguments for a long time, and we keep overcoming them. One of these days they will matter, and we'll see it in the price action, but that isn't happening yet.
I continue to look for some quick long trades, but my scans are coming up with very little. So while I'm not bearish, I am positioned in a very defensive fashion. I have some Direxion Small Cap Bear (TZA) and would like to be aggressive with it, but until those dip-buyers lose their vigor, all you can do is play the dark side for some pennies.
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