Where Are the Dip Buyers?

 | Sep 22, 2011 | 10:34 AM EDT
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The most significant thing about the early action is that the dip buyers are moving very slowly. Given the intensity of the selling, it isn't surprising that they are gun shy, but it is almost automatic that some buyers will jump in whenever there's a big gap-down open.

It is going to be tough to trust a bounce to last for long with this much downside momentum building, but we are stretched and that will likely give us temporary respite.

The big question is how trusting can we be of a bounce when we are breaking down this badly. This may be a good environment to catch some very quick countertrend moves, but the big picture is not improving.

As you might expect, breadth is horrendous with just 580 stocks in the green so far. Oil, precious metals and commodity names are being crushed, and many banks are hovering around annual lows. Once again, there are no safe havens for the bulls, although the big-cap momentum names, which have been so hot lately, are seeing decent bounces.

While I'll try to play some quick bounces in this mess, I'm mainly taking stops and refining buy lists. I continue to feel that we have not yet seen the lows of the year, and that is going to be what we need before I look at any longer-term positions.

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