A late-day bounce took us off the lows but it was not a pretty day. Breadth was extremely poor at better than 4-to-1 negative, and the dip-buying was much more contained than has been typical lately.
Fundamental issues haven't mattered much, but concerns about the Fed's caution over further quantitative easing and economic weakening in Europe were seized upon as excuses for selling.
None of the fundamental worries matter for long, and you have felt a bit silly if you became too defensive too quickly, but the selling today had the feel of a change in market character. The negatives seemed to matter a bit more today, and the breakdowns in individual stocks a bit more severe. Names like Apple (AAPL) and Priceline (PCLN) held up relatively well, but leadership has been narrowing and technical patterns deteriorating.
My bet is that the market is undergoing a shift and it is time to become much more defensive. I still expect to see some bounces that will keep the short side challenging, but after the run we had in the first quarter, the name of the game now is to keep portfolios near their highs and to be more selective with buys while the market sorts things out.
While the point losses on days like this can be painful, the potential for new opportunities takes some of the sting out of it.
Have a good evening. I'll see you tomorrow.
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