Dip Buyers Haven't Reported for Duty

 | Aug 10, 2017 | 11:11 AM EDT
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Unlike yesterday, the dip buyers are in no hurry to go to work this morning. The primary difference is that there isn't any specific news catalyst to serve as a trigger. As I commented yesterday, the way the market operates now, there isn't any big reaction to news. The program trading focuses on reacting to any reaction. When we have a selloff on news about North Korea, that triggers the "buy the dip" algorithms.

This morning, since there isn't any specific news, the typical buy programs don't operate in the same way. There isn't anything to trigger a reversal, so the selling continues and there is a drip lower.

Breadth is running very poorly again at close to 3-to-1 negative and the number of stocks at new 12-month highs is down to under 50. That pretty much tells the story about the state of momentum.

Although the major indices aren't that far from all-time highs, the average stock has not been acting that well for a while. Currently only about half the stocks in the market are trading over their 200-day simple moving average, which means many have already corrected or done nothing for a long period. It has been a rolling correction to some degree.

The market has consistently bounced back from the poor action we are seeing this morning, so many technicians are waiting to see if we have a weak close. That would indicate a change in market character, especially with the S&P 500 trading at a three-week low. It is still above its 50-day simple moving average, but that is the key level now and will likely generate at least some sort of bounce try.

I am doing little right. As I mentioned yesterday, I have some index shorts and have been looking to play them more aggressively.

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