The big question this afternoon is how much risk do market players want to take on with European summit meeting looming? We've had a couple weak-bounce attempts so far, but they have been turned back and the dip buyers are quiet.
Breadth has actually slipped a bit from the early levels and is now around 5-to-1 negative. The relative strength in big-cap momentum names has dissipated except for Apple (AAPL), which is still green. Once again it is highly correlated action which means there is no place for the bears to hide or for the hot money to chase.
In the bigger scheme of things it is probably positive that we see some renewed worry and concern. The number of folks confident of a year-end rally has been growing and we really need to rebuild a wall of worry.
What worries me the most about the market is the tendency toward lopsided action. We go straight up and then straight down. In mid-November, for example, we were in a very similar spot, technically just under the 200-day simple moving average. We then started to slip and we had seven straight losing days before we jumped and went straight back up. The dip buyers were stung badly and it is a big reason that so many failed to embrace the bounce over the past couple weeks.
Unfortunately, this European summit meeting is going to drag out and we will not have much clarity until Monday. You can always bet on the European news flow and actually have pretty good odds of catching a positive rumor, but it is going to be very choppy until next week.