Looks Like the Uptrend Has Sputtered Out

 | Feb 21, 2013 | 2:15 PM EST  | Comments
  • Comment
  • Print Print
  • Print

The action so far Thursday is confirming a change in the character of the market. I've been writing for a while now that we need to let the price action be our guide. After the weakness Wednesday and the follow-through today, it is clear that the recent uptrend has sputtered out and that the market is in danger of rolling over.

I don't want to be too negative here, as this is the first bout of real selling we have seen so far this year. But it is very important to take some defensive action, just in case this isn't just some healthy consolidation. So far the action today constitutes confirmation that the bears are gaining control. We have seen a few minor bounce attempts, which were turned back, and the market hit a new intraday low around midday. That is an indication that there are "stuckholders" who are looking for exits into strength.

Breadth is running better than 2-to-1 negative again, and what's particularly notable is that the number of stocks at new highs is down to about 73 on the NYSE, while new lows are up to about 66. It has been a while since new lows have numbered anywhere close to the amount of new highs.

I've taken some stops and raised cash. I'm just going to stand aside for now and wait to see if the market finds some support. A weak finish again Thursday will cement the idea of a change in market character, and it will likely trigger some real fear among market players.  It is extremely important to not let losses grow too large at this point.

Columnist Conversations

Early yesterday I spoke here about the position we had on RH, and late in the day we sold this position and ro...
The only guarantee that investors will have in the second quarter is that quantitative easing by the European ...
Exxon Mobil (XOM) shares are back up near the $85.75 level. This area was solid support for about five months ...
Good closing piece by "El Capitan" on the nature of buyers these days. I totally agree. As I have recently wri...



Columnist Tweets


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.