Markets End Mixed On A Very Quiet Session.

Stocks put in a mixed session, on Monday, as the Nasdaq closed lower while the rest of the indexes finished in the positive. The SP 500 rose .15%, the Dow Jones Industrial Average rose .12%, the SP 600 rose .04%, and the Nasdaq fell .62%.

Volume was lower on the NYSE and the Nasdaq. Breadth was positive on the NYSE by a 5-to-3 margin and lower on the Nasdaq with losers over advancers by a 8-to-7 margin.

As can be seen by simply looking at the tape today, tech stocks were much weaker than the rest of the market. The blame for this is being put on EMC as it is a big old laggard that still effects the rest of the sector. Another hit on tech stocks was Merrill Lynch downgrading the sector. However, by simply following the indexes and price action of tech stocks followers of the CANSLIM formula have been long gone tech stocks already.

The Nasdaq has been much weaker the past five sessions than the rest of the market and that can be seen by two technical indicators I use on my charts. One is the Relative Strength line vs. the SP 500. As you can see by looking at a chart of the relative strength, the Nasdaq RS line has broken to new lows below the June lows on the Nasdaq. Another negative divergence has shown up on my Moneystream indicator on TCNet. Normally, I don't notice divergences in this indicator right off the bat. But with the RS line of the Nasdaq hitting new lows along with the Moneystream line hitting new lows my interest was peaked. With both of these indicators hitting new lows, along with all the ugly stocks in the tech sector, this is supposed to signal that internals are leading the Nasdaq down.

Since the Nasdaq is still above the June lows that is still holding up this follow-through--for this follow-through to be voided the Nasdaq has to go through the June lows--it would be wise to keep new longs small and be very careful in watching the tech stocks you do own.

Now, do the indicators leading the price lower mean the Nasdaq will definitely fail? Heck no. But it is wise to take all information into consideration when making a decision. When I see this divergence, along with my shorts doing ok, defensive sectors moving to the top of the Industry list, and seeing the market short-term overbought, I stay defensive and keep my cash heavy.

However, sentiment is getting very bearish on the Nasdaq. If the bull/bear ratio of II were at more extreme levels I might think we were near a bottom. Once again, though, emotions are still not extreme. Bulls still top bears on the II and the AAII bulls jumped big after the follow-through. Not the kind of fear you see at market bottoms.

A lot of earnings reports are coming up in the coming weeks so get ready for a wild ride in some issues. Have a great day and I will see you at Investors Paradise.

New Swing Longs: NONE

New Swing Shorts: ANST PII CXG ULTI NETL

Longs Outperforming: UARM RNST ABI CPY TZOO BWP CTS CXW CBEY USEY TIII BSML DDS BMR ECOL-34 KHDH MTMD

Shorts Outperforming: SWC JOYG BPFH USG AMAT RTP RES AVID MEOH ZRAN BTH ISCA GYI XNPT PBE TXRH

Stocks On Radar: DLP LQU -- both are possible long candidates. will have to do more research.