A Tricky Failed Bounce

 | Aug 16, 2011 | 12:19 PM EDT  | Comments
  • Comment
  • Print Print
  • Print

The market is holding up fairly well as optimism grows for something positive from the Sarkozy-Merkel press conference, which is due to start shortly. If it weren't for that news, this market would really be dead. The action is very slow, and breadth is still 2 to 1 positive, but the bears aren't having any luck gaining traction.

 

Like yesterday, we have a technical setup that suggests that the path of least resistance is to the downside, but it has been the nature of this market for a very long time to punish anyone who tries to fade bounces. Our oversold bounces always seem to have underlying support, even when volume is weak and the news flow poor.  

 

Even when the big picture looks quite negative, the single toughest trade in this market for the past couple years has been trying to time a failed bounce. It has been extremely tough to do, and I have to admit it keeps me from being aggressive with shorts. I'd rather just go to cash when I think we are due to roll over, rather try to short it, since the squeezes have been so prevalent.

 

I have a few things on my watch list, but the action is so slow right now that I'm doing little. Even if we do continue to hold up, there just isn't enough energy in the action to justify chasing things.

Columnist Conversations

The bearish star cluster on the Starbucks (SBUX) chart that I highlighted last week preceded price action this...
Ford is working on its third straight gain following two days of steep loses to start this week. At this...
Market is holding on for gains for now but think Doug Kass is right and could see some decent profit taking by...
I have a full blown article surrounding the U.S. Retail Sector coming out on soon, but for now let's just lo...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.