Still Some Momentum Action

 | Aug 30, 2013 | 9:29 AM EDT
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The market has been showing some signs of bounce for a couple days now and there continues to be some pockets of strong momentum, but the bulls have not yet been able to put together another V-shaped bounce.  

The V-shaped bounces tend to start slowly and then surprise most everyone when they keep on going, but I suspect that the bulls have become a bit too complacent about this pattern of action. I keep hearing optimistic comments from technicians who would normally be more bearish because they have been burned so often by a market that comes back from the brink of disaster.

Keep in mind that we are in the middle of the weakest time of the year seasonally and that many folks may use that as an excuse to forego some immediately buying. The news flow has shifted also with the focus now on tapering and the debt ceiling rather than the endless support of Fed created liquidity.

What has been most notable about the market action lately is that despite the poor technical condition of the indices there still is some aggressive momentum action in select stocks like Facebook (FB), Tesla (TSLA), Green Mountain (GMCR), Chipotle (CMG) and so on.

Typically, in a struggling market the leaders are shot down one by one, but we aren't seeing that so far. In fact, the inverse seems to be true and money is flowing into high-momentum names because they are relatively safe.

Next week the action should pick up as vacations end and people go back to work. Don't look for anything meaningful to occur today.

Have a great Labor Day Weekend and I'll be back at the turrent full time on Tuesday.

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