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Another strong open has been faded, yet the bears have failed to follow-through to the downside with more aggressive selling thus far today. Instead, we are falling into a familiar pattern of a rather dull tape throughout the session, as you can see on the 3-minute chart of the SPY above. The old Wall Street axiom is to “never short a boring market,” and while that does not always hold true, it sure seems like bears are having a tough time reversing any meaty portion of the bulls’ feast in 2012.
Perhaps the best way to gauge whether a given consolidation is bullish or bearish in nature is to constantly monitor individual issues. My portfolio has not come close to stopping me out of a bunch of positions, as would usually happen if I went long in a bearish tape. I am seeing the overall sum of the charts continue to rest after their recent moves higher. While complacency can be extraordinarily dangerous for bulls here, as I discussed yesterday there is a lot of harm that can be done by trading scared and panicking out of positions before they come close to hitting stop-loss points.
If nothing else, the past few sessions seem to illustrate that just because an opening gap higher gets faded, it does not necessarily follow that the bears are back in control.
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