Underlying support is kicking in and keeping losses mild, but the dip-buyers aren't showing the same level of interest that they did earlier this year.
The big question is whether we are in the midst of a topping process or a healthy reset that will quickly blow over and set up for further upside.
The bear's response is that a correction is long overdue and with high oil prices, economic slowing in China and Europe and the unlikelihood of further quantitative easing in the U.S., there are few positive catalysts to keep us running.
The bull's response is that folks have been underestimating the health of this market for some time and we still haven't seen any significant selling. The Nasdaq is correcting a bit more severely for the first time in 2012 due to weakness in Apple (AAPL), but this is just a hiccup. The fact that folks are quick to become negative at the first sign of red is exactly why we don't fall apart. The bears are overanxious, and that is going to make it tough for things to really crack.
I'm leaning more bearish than bullish primarily because I see few charts that look like compelling buys. A few things are acting well, such as Procera Networks (PKT), Sourcefire (FIRE), Dollar Tree (DLTR) and Buffalo Wild Wings (BWLD), but the selection is much thinner that it has been recently. The narrow action and the suppressed dip buying doesn't invite a lot of buying.
We'll see if the bulls manage another push into the close, as they have done so often, but there hasn't been much interest. On the other hand, if the computers kick, in they can quickly produce a squeeze in this environment.
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