Beware the Undertow

I have to head out early to a doctor's appointment and will miss the final minutes of trading, but it looks as though the bulls are pushing for some upside. They may succeed for a bit, but the mood of this market has changed quite a bit over the past week or so, and I look for the bounces to be sold rather than embraced. The skittish shorts may be squeezed a bit as well, but I look for more aggressive sellers to be lurking above, much as the dip-buyers were lurking under this market for so long during the uptrend off the March low.

It has been a very deceptive day, with the senior indices looking much better than the overall market. Small-caps are not acting well, and breadth has stayed close to 2-to-1 negative. Retail and biotechnology are leading, but it is disappointing that semiconductors can't seem to get going despite some good news in that group. Consumer staples like Colgate (CL - commentary - Trade Now) and General Mills (GIS - commentary - Trade Now) are doing well, but oil and commodities are the obvious big drag today.

I have a few things going on the long side, but nothing I want to embrace for very long. I'm looking for the short setups to develop again, but we'll see if the bulls can get a little more going first. I think they will fizzle fast, but they sure seem anxious to try.

Overall, it is muddled action with a negative bias, and there is no reason to be too aggressive. The dip-buyers are obviously weakening, and if you chase strength, you'd better be ready to flip pretty quickly or you'll end up stuck.

Have a good evening. I'll see you tomorrow.

No positions.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.