Deceptive Market Action

 | Jan 28, 2013 | 4:39 PM EST
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The action today was deceptive. The indices held up well and the Nasdaq led due to a bounce in Apple (AAPL), but there was a fair amount of profit taking under the surface. Breadth was about 2700 gainers to 2800 losers, which isn't bad, but recent leaders were the worst performers. Stocks like 3D Systems (DDD), Netflix (NFLX), Stratasys (SSYS), PetSmart (PETM) and CommVault (CVLT), which had been strong, were hit hard today.

Typically, it is a mistake to be too negative too fast when the market is trending the way it has recently, but when leaders are shot down you have to be a little more cautious. Stocks that go up on momentum come down on momentum and become very ugly very fast.

Overall, the indices still haven't done anything wrong and I don't see any reason to be aggressively bearish, but it is a good time to tighten up defenses and not let things slip. We still haven't seen any topping action, but few issues deserved attention.

Even some of the bulls are weary of the lopsided action and hoping for a shake up to set up new trades, but the market is often very uncooperative about creating new entry points. Keep on managing positions and wait for the price action to tell the story.

Have a good evening. I'll see you tomorrow.

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