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We finally got that gap-fill down to Tuesday’s open this morning, in the form of a gap down of our own. To be sure, we have some extended charts that are due for a 2-3% correction. At issue is whether the selling represents an opportunity to cut long exposure or, in fact, step in to buy the dip. The price action to start 2012 has been encouraging, at least more than what we saw to close out last year, as more and more stocks seemingly have been permitted by the market to break out. I continue to look for broad-based leadership, but that can emerge as stocks improve.
The materials/energy complex, as well as financials and transportation, stocks are leading us lower this morning, but they had been the stronger groups of late. Here again, there is a legitimate issue of whether this dip represents a buy more than a selling opportunity. I am slightly hedged now inside 12631, although my longs are largely not getting hit too badly, despite the broad market gap down. As the session progresses, I am looking to see if the bulls step in to defend the 1280 area on the S&P 500 (scene of the gap-fill from Tuesday) in front of the three-day long MLK holiday weekend.
OK, now we need a photo of the female persuasion to offset the pain induced by the current photo.