After the ugly open, the big question is whether the bounce-buyers deliver another quick recovery, or get burned when the indices take out the early lows. So far, they look skittish as the first minor bounce attempt barely took out the opening high. We already made a lower low, which means we have trapped dip-buyers. If we don't get more upside quickly, they will add to the downside momentum as they look to escape.
It is a sea of red this morning with breadth running 730 gainers to 4350 decliners. All major sectors are red with the stronger dollar taking a big toll on gold and commodities. We have selling across the board with banks, chips and oil all being hit.
The time to become bearish is when the character of the action changes, and that seems to be occurring now. We are likely to see some bounces, but when a change in character occurs, those are opportunities to sell and short. Buy the dips In an uptrend and sell strength in a downtrend.
I'm working on my shopping lists and will be looking to buy some of my favorites, Web.com (WWWW), Velti (VELT), Clean Energy Fuels (CLNE) and Aegean Marine Petroleum Network (ANW), as they find support, but I'm in no rush. The main job right now is defense.
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