no rush
Wednesday, February 23, 2011 at 07:18AM Judging by the ES reversing 15 points from overnight lows in the first hours of the trading day, the US market was thinking we’d have a repeat ‘smoothing ‘ as post- Egypt sell off reversal. The shorts thought the same and the morning bounce was purely short covering. As speculated here, investors looking to buy at dips would not chase these morning lower prices.’… the expectation of this occurring on the initial gap down might be a little premature”… . “This time we are dealing with tensions hitting the first ‘oil’ producing country and so it might be a little different this time”.
Once the defiant madman reiterated he was nuts later in the morning, the market started to see money flow come out of individual stocks and it was no longer a pure ES/SPY trade. The selling was broad based, but not panicked yet. Mostly, a lack of bids. ( “This investor likes to wait for things to settle down some before buying and so unless things change drastically they will likely wait a full trading day or two”). Unfortunately, the inflation links (oil prices) paint a different bigger, the situation escalating instead of like Egyptian de-escalating, so this dip may have more room before buyers step in. This time the market will likely spend more time below 20MA SPX 1314 support (if busted on a close) unlike Jan 3% dip off highs (also support at today’s low 1311). This dip is only half of the Jan shallow dip so far.
Also, keep in mind some hawkish ECB comments kicking around (May tightening ?)), Housing eco data disappointing, NZ quake, last week’s note on ‘momo’ names lagging are more ‘headwinds in a market that doesn’t have Earnings or ‘better than expected’ eco data to act as tailwinds any longer in the short term.