This Day in Bubbles - Not Many?

Looks like some of those late to the Chinese speculation bubble in no name $3 stocks are getting burnt today. Friday was not a good day for most of them either. Perhaps this game has run its course for now or maybe it is just a 2 day break in the casino. Interesting to note this when the Asian markets were blasting upward overnight.

Interesting to watch the major indexes hold up while breadth is quite negative under the surface today in the markets. This might be more of the rule in the months ahead as large cap international stocks (of which a plethora dominate the Dow Jones and SP500) remain the place to play whereas the smaller domestic fare face reality (not withstanding their dead cats bounces last week). So the indexes will look better than what is going on, under the surface. This was the case the first 2 weeks post Fed cut, until last week when breadth improved and many new sectors joined in the rally. Only problem with that, is at some point these larger international based stocks start to get mighty expensive.

With that said, we have not had any sort of serious setback in the market for weeks which makes it tough to really get too excited from the long side (most new buys are simply chasing momentum)- but you could of said that last week or the week before. After the big rallies the market doesn't really pull back - it just sits, sits, and then rallies more in a few days. Eventually this pattern will break, but right now it seems performance chasing is the name of the game and every dip is bought. Let's see if earnings season puts any reality back into the market or at least the stocks facing the domestic economy.