The Most Obvious Totem

 | Mar 27, 2014 | 3:31 PM EDT  | Comments
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Stock quotes in this article:

nflx

,

scty

,

tsla

,

celg

,

gild

,

FB

,

goog

,

cat

,

xom

Don't look at the charts for the highfliers. For most part, they are beyond hideous. That's really the problem for many of these stocks because they've been up so much for so long that they all look like heads and shoulders. All over the place: Software-as-a-Service, biotechs, the Netflix (NFLX)/SolarCity (SCTY)/Tesla (TSLA) types. Yes, they all seem to be tracing out right shoulders.

Why does this matter? Because many people are in these stocks because they "acted" great. They don't really know about Celgene's (CELG) Revlimid. They aren't sure there's a problem with the pricing of Gilead's (GILD) hepatitis C cure. They bought Netflix because they liked it. They bought Tesla because it was cool.

Those who don't know what they own like to fall back on totems. The most obvious totem is the chart.

Now the funny thing about charts is that they can change. Many of these stocks, if they hold here, can really pivot -- stocks like Facebook (FB), which are teetering, or Google (GOOG), which seems to be hanging on by a thread.

But the stocks have to start right here or the damage will be done.

I am not a chartist per se, although I write about them in Get Rich Carefully. I also know that the recent chart work of Bob Lang featured on "Mad Money" showed that we could bounce here. We just don't know if it is a dead cat bounce or not.

But so far, we aren't even getting that -- something that's incredible because many of these stocks are supposed to do well when interest rates go down.

It is a total quandary.

Maybe that's why something feels so momentous. We have lost the support of so many charts except the ones like Caterpillar (CAT) and Exxon (XOM) where there are no gains. The value stocks, as exemplified by these two and many other industrials, could run far if the growth stocks keep breaking down. I feel it has become very zero sum.

Anyway, just add the charts to the "uncertain" feeling evidence that seems to add up by the moment. Nothing's making sense today.

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