Perhaps because it's a Friday afternoon, although that sounds like a rather feeble excuse, the dip-buyers managed only a minor bounce in the closing hour. It took us off the lows, but breadth was quite poor at 2 to 1 negative and, more importantly, the momentum favorites were hit particularly hard.
MA, GOOG, WYNN, LVS, NYX, ATI , RIMM, NIHD, AKAM, etc., suffered some pretty good hits as the hot money traders hit the exits.
So is this just another run-of-the-mill pullback that the bears will be unable to build on? That seems to be the consensus, and given the recent track record, looks like the smart bet.
The big problem with how readily the market is to dismiss the bears is that it is exactly the sort of complacency that the market beast loves to punish. Just when we become so confident that we think something can't possibly happen, the market makes sure it reminds us that we should never take it for granted.
I'm not sounding the "everyone out of the pool" alert, but let's not be so sanguine that we don't at least consider the possibility of a rough patch. Tighten up those stops, raise a little cash and be more selective with your buys. If it turns out to be another false alarm, you can reload the longs and maybe even find some new and better ones.
Rev Shark Blog Embrace the Contrary 2/9/2007 1:27 PM EST The ability to hold different viewpoints at the same time is key in trading.
Rev Shark Blog Riding Gold on the Long Side 2/9/2007 10:31 AM EST Gold is up sharply again; networkers continue to slip.
James "Rev Shark" DePorre is the founder and CEO of Shark Asset Management, an SEC-registered investment advisory firm. 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 to send him an email.
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