The Weak Action Is a Healthy Sign

 | Dec 07, 2011 | 10:49 AM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

cjes

This is the first morning with any notable weakness in eight days. So far, the initial bounce attempt was weak, and now we have a second leg down kicking in. With all the news scheduled to come out of Europe, there's anticipation for positive headlines. But the other side of the trade is that we've had such a big move recently that we are setup for a "sell the news" reaction, even if there are positive developments.

Not only do we have to wonder whether good news is already fully discounted, we also have to remember that the last couple of European summits were disappointing. The folks in Europe are great at announcing that they will make some important announcement, but actual results are almost nonexistent.

I would definitely keep short-side trades very fast, as the potential for a quick spike on news in the next couple of days is high. On the other hand, I have to admit it is a relief to see a little more intense selling for a change, as it may help charts to develop better. There is a lot of interesting stuff that just needs a few days of rest.

I don't believe that this market is topping out yet. In fact, the weak action this morning is probably healthy as patient holders take gains and underinvested bulls finally have a chance to buy a dip.

I started nibbling at a couple of favorite longs that l like longer term. C&J Energy Services (CJES) is one of my favorites in the oil services sector and put an initial position in the Sharkfolio today.

Columnist Conversations

Lang:
The chart of Delta looks very good and we have seen good option flow recently. This airline stands out among ...
mark mobius on market watch (dow jones) says buying baba is "not a good idea" due to his take on baba's corpor...
Mike Paulenoff's comments on Tarrget (TGT) prove once again how fast investor sentiment, and stock prices, can...
GS is trading $187.91, up 1.9% small with IV30™ down 8.8%. Conclusion This is a stock price, volatility...

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.