The character of the action changed a bit today as the bears put up their best fight in a long time. The dip-buyers spiked us up to recent highs twice during the day but were turned back rather vigorously both times. We even went out at the lows as the market ignored more yammering from the European finance ministers, who are obviously hoping to keep their comedy show running for a few more months.
What was most notable about the action today was that Apple (AAPL), the holy of holies in the land of dip-buyers, reversed hard and went out at its lows. Apple had been up for 10 straight days and acted like it would never go down again. It has been anointed the greatest stock in the history of mankind, and it is guaranteed to upset the market beast that punishes anyone who gets too cocky.
The big question for us to contemplate now is whether the recent back-and-forth action is a signal that we are building a significant top or just healthy consolidation which will eventually set us up for further upside.
I don't know the answer to that question, but I'm leaning toward the defensive side, primarily because I just don't see much that I consider to be set up for buying right now. I see plenty of stocks reversing and acting much weaker than the broad market indices, but it is too early to do any bottom-fishing. Maybe with Apple finally being knocked down, the indices will be more reflective of the action in individual stocks, although I much prefer that individual stock-picking continues to work like it has now for a couple months.
The bears haven't killed the uptrend yet, but some increased defensiveness is warranted. The cracks in the foundation widened a bit more today, and it won't take much to trigger additional profit-taking.
Have a good evening. I'll see you tomorrow.
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