There were debacle de jours (i.e. stocks getting hit hard) everywhere on Wednesday. So many that I was actually surprised that the Ps managed to end flat and the Quack (Nasdaq) and Rusty (IWM) actually ended higher.
Let’s look at the indices before we dig deeper.
The Ps ended in flatsville. This action keeps them right in the middle of their intermediate-term sideways range. Net net, they haven’t made any progress in nearly a month.
It’s what lies beneath that has me concerned. First, the sectors: Many areas broke down to new lows. These include, but not limited to, Insurance, Aerospace/Defense, Manufacturing, Shipping, Consumer Non-durables and Utilities. All of these areas appear to have topped.
Energy and Chemicals sold off fairly hard. This action puts them back to the bottom of their sideways trading ranges.
In addition to the debacle de jours, the behavior was very erratic internally. Although most of the action was to the downside, some stocks just went straight up. US Steel (X) for instance, jumped 19% because they lost money but didn’t lose as much as they usually lose. Oops, did I just confuse the issue with facts? Seriously, it’s the erratic action in areas like Biotech that has me concerned. It was rolling over, then went up, began selling off then went back up.
The Semis ended higher but they appear to be topping—forming a Pioneer First Thrust down and they could Bowtie down soon.
So what do we do? Logically, it would make sense to put on a short or two given the fact that many areas are topping. Unfortunately, the recent behavior suggests that no one is in charge-the lunatics are running the asylum. Many stocks are getting whipsawed. When this occurs it’s usually a sign to let ‘em fight it out. For the aggressive, maybe look to nibble at the Semis for a potential short. For the most part though, again, in this market you’re better off being a spectator and not a speculator.
Best of luck with your trading today!
P.S. The chart show for today will likely be cancelled (if you signed up, you will receive a notice if/when I do). Urkel “Did-I-do-that?” the excavator operator dug up all three of my line lines (plus a thousand others). I’m working off satellite which goes out every time a cloud or bird passes.
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