Not a Big Deal

End of Day Analysis:

Stocks tumbled Wednesday, giving back all of Tuesday’s rebound and then some. Volume was modestly higher, but far from panic levels. The 60-point selloff from last week’s highs was enough to knock 10% off of Stocktwits’ SPY bullish sentiment gauge, but the reading is still in bullish territory at 55%.

The thing both bulls and bears need to remember is markets go up and markets down. That’s what they do. Talking heads try to come up with a reason for every gyration, but the simple fact is prices fluctuate. They always have and always will. A dip from 2,075 shouldn’t surprise bulls and bears shouldn’t expect the market to collapse after slipping a couple percent from all-time highs. It’s been a strong, one-direction move from October’s lows and everyone should agree it is normal and healthy for the market to trade sideways here.

While the dip has dampened bullish enthusiasm, we probably need to test 2,000 support before we can say sentiment has been reset. Holding 2,000 and the 50-dma sets up an interesting buy-the-dip opportunity. If we slice through support and selling accelerates, then the next stop is 1,950.

Jani