The ability to break FNM on bad news is clearly the news of the day. Beyond that the tape seems pretty muddled. The bears could have really opened up on longs from late last year and new longs that have added to positions recently (that's me) but instead the action has been pretty well contained. The exception to that is probably the net stocks on the GOOG reversal. I would give them another day to see what happens before calling them dead but that is just me.
I am looking at the inability to generate selling pressure as a sign of a bottom. I would also view this market as one that is rewarding patience. Buying the first retest seems to be superior strategy to jumping on breakouts as they occur. The reverse was true at the end of last year. The list of retailers I gave the other day still looks interesting though ANF is no longer in a good buying position.
Some have begun mentioning the Iraqi election on Jan 30th as a catalyst for the long side. Based on fundementals it is a non-event to me but it may spur retail buying. I would guess if that is the case the tape will start to show some strength before the event.
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