The market has been sending warning signals lately and now it looks like the dip-buyers may be losing their zeal. We have had only feeble bounce attempts after the big gap-down open. I don't think we've seen that sort of action all year. Typically, there is an aggressive bounce attempt very quickly.
Another thing that is notable this morning is that breadth is at the worst level of the year and is better than 10 to 1 negative on the NYSE. The big-caps are not providing a smoke screen either, with selling hitting IBM (IBM), Apple (AAPL) and other recent outperformers.
I suspect the dip-buyers are starting to feel trapped and are looking for an escape, which is what causes a trend-down day. If we don't see a bounce before noon, the chances for one will diminish as the day progresses.
There are a lot of stocks on my watch list, but I have little interest in buying them into the teeth of this decline. When small-caps start to fall, they can really collapse as support simply disappears. If you are going to try to catch them, you have to be ready to average in very slowly.
Mitek Systems (MITK), one of my recent favorites, has a recommendation and a $17 price target this morning. I'd like to add to it, but in this environment, you simply can't trust upside momentum to last.
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