Good earnings from XOM wasn't enough to keep stocks afloat. After a good start for the indexes, the markets decided enough was enough and rolled over to finish the day on a negative tone.
The SP 600 led to the downside with a 1.2% decline, the Nasdaq followed with a .8% loss, the SP 500 fell .4%, and the Dow Jones Industrial Average was down a couple of ticks.
Volume picked up on the Nasdaq and was ever so slightly higher on the NYSE. The losses with a pickup in volume on the Nasdaq gives the Nasdaq its second distribution day since the rally tried to start on the 18th. This pretty much ends the rally attempt. You don't want to see two distribution days before a follow-through.
Breadth was negative on the NYSE by a 9-to-7 margin and negative on the Nassy by a 3-to-2 margin.
Now as for the market I can say that after today it looks as ugly as I have seen it since 2002. I simply have not seen so many darn ugly charts in a long time. There are breakdowns everywhere. And when I say everywhere I mean everywhere.
If it is the former leaders of small caps, steel stocks, gold stocks, or even those oil stocks, most stocks have CLEARLY topped in those sectors and there is only one direction to go after three years of nothing but gains; down. The current leadership of the IBD 100 index gets killed every week too. The new stocks that then make it to the list are simply gone the next week. The breakdown in all the DJ Transport stocks and Basic Materials stocks and indexes today is another horrible tell that the market is not healthy. Then lets look at the defensive HMO sector. That got whacked too! Everything and I mean everything is getting sold. How does the SOX index look? How does the Nasdaq look? What about the recent breakouts in stocks with decent bases of BIDU and PMTI? Did those work? Nope. Not much is working.
What is working are your typical bear market sectors. The Utility-Gas and Utility-Electricity index is just FLYING up the list of top sectors during the recent three months. Then your top sector right now is the Food-Flour & Grain group. That sector is leading along with the Beverage-Soft Drink, Food-Dairy, Banks-Southeast, West, Northeast, Tobacco, Telecom-Services, Media-Cable, Medical-Nursing, Medical/Dental-Services, and the whole Leisure group. THIS IS BEAR MARKET LEADERSHIP! These stocks will go up but they normally don't go up in a smooth fashion. If you look at my list of longs you will notice something...most of them are in the top sectors. Odd! As Cramer says there is always a bull market somewhere. That may be true but how choppy and wild of a ride is that bull market.
I still think it is best to stay in cash and keep it heavy for the next real bull market. Then you can gun it and produce HUGE gains. Or you can trade yourself to death and drain the account slowly as you pay your commissions to your favorite broker. They are people too. They have families to feed.
So with all this data I still say: stay patient, calm, keep a smile on your face and keep your cash level high. This too shall pass and the skies will open up a fantastic bull market. Never sell America short, long-term.
Aloha and have a great Friday. I will see you at Investors Paradise, where I post charts and get in depth on the market. If you want more, you can't afford to not be there.
New Swing Longs: NONE
New Swing Shorts: CGX IJS LHO IJT HYDL DRIV SYNA RRGB NCC RACK FDX
Longs Outperforming: AKAM-130 STNR CTV BOT CTCI-67 LMT PAY-31 SEIC VLG-31 MO BWP TYL FORR DLP ABI GISX BSML
Shorts Outperforming: SWC JOYG BPFH ELY USG WSM RTP RES AVID MEOH MAFB BTH APOL GYI TXRH XNPT PBE MAS PII CXG POOL PWC VO OPTN IYT SUPX NTE GE WFSL PDCO ESIO C AME HTLD VXF VB WTI WERN FRC RS DSL CATY AF WTFC HMY IFX X STLD CPF MAR AGP LDSH EXBD NCI
Stocks On Radar Screen: STR CTV SWY BRR LBIX IMAX STEC
Cover Shorts: FRZ AB HVT
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