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MARKET WRAP UP 01/19/11
In what proved to be the first real victory for the bears in weeks, the S&P 500 finished down 1.01% to 1281. After AAPL earnings last night, the market was in a “sell the news” mood today, and the regular dip-buyers appear to be losing a bit of their luster. Moreover, after the bell today I see that FFIV, as well as the entire cloud-computing space trading in sympathy, is causing some real turbulence. At the same time, a consequence of such a powerful uptrend is that we should have sturdy support zones not too far below, in the event the bears can actually follow-through on today’s selling. Thus, becoming an aggressive bear here is a tricky proposition.
A real test of mettle in the coming days will be whether that 1276-1277 on the S&P, which had previously acted as resistance to start the year, will now turn into bonafide support. Indeed, if that does happen, then this selling will be yet another vicious trap to suck in eager bears. However, if the bulls cannot adequately defend that zone, then extreme caution is urged with any potential and existing longs, as a deeper broad market correction would become a distinct reality.
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Sold my EEM. Now holding CEPH, DG, DWA, ENDP, EPV.