News from the European Central Bank is causing chaotic trading as market players attempt to sort it all out. The pattern from Europe is that any bad news is quickly followed by something positive, which is why we've had dozens of Europe-is-saved rallies. If it were actually saved, we'd only have one rally, but this way the supply is endless.
The dip buyers made a very weak early effort, and the potential of another leg down looks rather high. We have a news vacuum for a little while, and the ECB comments have undercut the optimism that was building last night.
Although we aren't down that much, breadth is poor at around 4:1 negative. Gold and banks are leading to the downside while we have some relative strength in chips. Big-cap momentum names Apple (AAPL), Google (GOOG) and Chipotle (CMG) are helping to hold things up so far.
I'd like to be a buyer, but I'm biding my time and watching for signs of support. On my radar is Inhibitex (INHX), which is in a high-level base and pulling back on declining volume. Silicon Motion Technology Corp. (SIMO), which I mentioned recently, continues to consolidate well and just needs a better market to get it moving.
The sellers are gaining a little traction as I write, and I'm going to give them some room. As I commented recently, we need the weakness to set up better charts, so I remain optimistic.