The action is very chaotic this morning. The market gapped up, sold off sharply, rebounded on housing news and is now hitting new lows. Crude oil is being pounded and bonds continue to rebound. Homebuilders and banks are leading while chips, oils and biotechs are lagging.
The bears say that this choppy action is a sign of a top because it is indicative of increased confusion among market players who are starting to wonder if maybe the market can't run straight up forever. Perhaps, but the action so far hasn't amounted to anything more than healthy consolidation following a big run. The market needs a shakeup once in a while to allow for profit-taking and for new buyers to enter on pullbacks. I'm not too worried about this action yet.
I've been flipping some stocks aggressively this morning, such as Nationstar (NSM) and Qihoo 360 (QIHU), but I'm looking hard for new long entries. As I discussed earlier this week, with the central bankers out of the way we should have a market that is more favorable for stock pickers. Even if the indices struggle, we should see stock-specific action that we can trade.
One I'm watching closely is Home Loan Servicing Solutions (HLSS), which has been consolidating well but seems to have a seller sitting on it at the moment.