Adapting to the Changing Neighborhood

The textbook wash-out capitulation did not happen to start this new week, as the broad market is staging a decent bounce headed into high noon. Despite some early carnage in the social media plays, namely Facebook, the likes of Apple, Priceline.com, and Starbucks are bouncing on reasonably strong intraday volume. While the overall market has much to prove in the coming weeks to reverse the technical damage that has been sustained in April and especially May, a multi-day bounce that punishes latecomer short-sellers is just as much of a risk as is another rollover.

It is tough to get too excited about a mere bounce after the straight-line down action that we have largely seen this month, but I am going to keep an open mind to the idea of us bouncing further. That said, I remain in 100% cash and will be looking at deploying some of it this afternoon if the bulls do not fumble the ball again. You can bet, though, that I will not be going all-in long anytime soon. The shorter-term timeframes always have to be put into context of the overall market picture, which is still in a corrective phase until proven otherwise. In other words, if I go out with this market I am looking at some fast dates, not long-term relationships or marriages.