Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
It finally looked like some sort of selloff may occur this morning but ONCE AGAIN the “buy the dip” crowd was rewarded. At these levels of overbought I am now officially falling into the shocked camp that the same ploy can work day after day without fail. I can’t remember the last time the buy the dip crowd was punished. Generally the market does not reward the same behavior this often.
As the market goes higher and higher into the ether, generally you want to tighten stop losses so you don’t get caught red handed on a reversal but this morning’s selloff was just deep enough to capture some of those…. which of course after the reversal later in the day makes you look foolish.
That said it was an interesting day as the utilities sector was the leadership group for the session – perhaps the first time in 2012 that has happened. (this was the leader of late 2011 as we noted quite often) Along with utilities we have decent strength in the precious metals, and finally energy stocks seem to have perked up the past few days after many doing very little during the move from December.
Other than that there is very little to add that has not been said here or in a multitude of other financial blogs – the market is extended, but remains so. At this juncture you are playing along knowing there is going to be a day (or three) of pain down the road when this thing reverses since the crowd is now all in. (I am not talking about a 8 to 10% dip, heck even a 3-5% version) Eventually “buying the dip” is going to backfire. Even Dr. Doom is now bullish on the market.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
