Tough to Turn Bearish

Despite the financial news media milking the European debt and U.S. deficit reduction issues for all of the fear that they are worth, the underlying price action in many stocks is far from bearish. While it is true that the semis are getting hit today, they did not lead us on the way higher over the past few weeks. Moreover, as I discussed in this video recently, they have not necessarily been a consistent leading indicator for the market in the way that Freeport McMoRan has. Despite how bad the action might have felt yesterday and most of Friday (and even the futures moving sharply lower late last evening), the daily charts of many key indices and charts, such as AAPL and the aforementioned FCX, are settling into bull flags more than anything else.

The gains over the past few weeks are still largely intact despite this recent bout of selling, but sentiment has quickly turned negative again. With that backdrop, it is tough for me to turn bearish here. I am still stalking attractive entry points for a variety of longs.