Not Itching to Chase

 | Apr 25, 2012 | 10:45 AM EDT  | Comments
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Apple (AAPL) has helped to produce a big open and better than 4-to-1 positive breadth but so far the chasing looks rather mild. There are plenty of good bounces but the buyers don't look too anxious about being left out. Typically the longer a bounce holds up the more inclined buyers are to add long exposure, but I'm seeing some market players using this strength to escape longs rather than add to them.

We have the added complexity today of the FOMC, and with the weak durable goods numbers this morning you can be sure there is going to be intense focus on anything that hints at future quantitative easing.

Overall we are in a rather challenging technical position, with many broken stocks producing oversold bounces today. A one-day bounce doesn't repair the recent technical damage that has been done, and there is the danger that these bounces will not hold. Downtrends do their most damage when bounces fail and a new crop of recent buyers look for a quick exit.

I'm doing a few quick trades but have seen little that I'm in a rush to build right now. One group I'm watching is smaller-cap oils, which look to have found some support and are turning up. They haven't done much recently and have formed some decent bases.

We are slowly losing momentum and I'm going to stay very selective with buys.

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