One of the biggest changes in the market in recent years is the lack of any real negativity. Fear and panic just never seem to develop. We'll have some lackadaisical downside like we saw this morning, but seldom does there ever seem to develop any real concern that the market is going to fall apart.
We are seeing a good example of this phenomenon again today. We had some poor action this morning as concerns about poor earnings took hold and the commodity and oil rally cooled off, but the selling never really picked up steam. Instead, the bounce buyers show up and we have some wimpy rally. No one is really worried about this market because we are so used to the steady dip-buying support.
From a trading standpoint, it is the ebb and flow of strong emotions that tend to provide the best opportunities. When there is some actual fear in the air and things pull back, that is what makes for some interesting entry points. Instead, we have unlimited bids and automatic dip buying. There is no fear of being caught in a downtrend. We were down for a couple hours, so it must be time to buy.
Obviously this trading action is a function of central banks. We know that market players are counting on endless support and the central bankers are accommodating them. They have saved us so many times in the last six to seven years that it seems foolish to have any real worry.
This lack of any real downside is what has robbed the market of its natural feel. We used to talk about fear and greed being the main market moves. There still might be some fear, but the fear is not buying fast enough or big enough and missing out.
I've taken a couple stops, but for the most part my positions aren't pretty flat. I'm watching Yirendai (YRD) for a remount as it pulls back after the strong action this morning.