Easy come – easy go. The S&P 500 rallied to within two points of its all-time high yesterday. This morning, those gains temporarily evaporated. The volume is extremely light and I would not read too much into this price action.
European markets are down on credit concerns. This will blow over quickly. Portugal, Ireland and Spain are on the mend. Cyprus will reopen its banks this week and Italy will resolve its political issues.
Asset Managers want to buy stocks ahead of earnings season and the end of Q1. Time is running out and they know that next week’s employment reports will be market friendly. The market should rally into the weekend.
The dip this morning quickly found support. Once Euro markets close, our market will grind higher.
This move was nothing more than an absence of buying. Asset Managers pulled their bids so that they could gauge selling pressure. When the volume was light, they knew there was little conviction behind the move and they refreshed their bids.
As I have been saying, every dip is shorter in duration and magnitude. The bid is strengthening and Money Managers are getting aggressive.
Chicago PMI and initial jobless claims will be released tomorrow. Both numbers should be good.
Buy this dip and get ready for a rally to new highs.