Too Exhausted to Chase

 | Nov 12, 2013 | 7:30 AM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:






There has been a lot of talk lately about bubbles and whether the market is currently in one. I addressed this last week, but I will do so again: A market doesn't have to be in a bubble in order for it to merely be a top -- or for it to undergo a correction.

In my view, far less discussed is what inning exactly the bulls believe we are in -- because we all know the statistics. A market that is up 20% year to date, come November, usually ends the year strongly. To me, it feels as if the market has had a great party these last several years, and those who are arriving now see an empty punch bowl and only crumbs from the chips. It doesn't mean the party is over. It just means there isn't as much to go around.

Last week's wild gyrations do not constitute the kind of action that happens early in an uptrend. Those moves are highly emotional, tending to come either at bottoms or at tops -- and I think we can all agree that the market is clearly not at a bottom.

What I see is that many of the momentum stocks, or high-beta stocks, have rolled over and stalled out for the most part. They are trying to regain their momentum, but it just isn't working. I have discussed biotech stocks several times of late, but let's look at them again.

The iShares Nasdaq Biotechnology Index (IBB) has not broken the uptrend line that starts early in the year, but it doesn't take a chart reader to see that this stock hasn't made any progress since August. So one of the hottest groups this year is no longer hot. The good news is that the fund hasn't made lower lows, and it hasn't broken the uptrend line. Still, you can see its upside action has been limited for more than three months.

Everyone finger-points at Tesla (TSLA) and its fall from grace, but what about LinkedIn (LNKD)? This stock has gone all the way back to its July and August levels. The problem with this stock is that it has broken its uptrend line. It has made a lower low.

What I see, therefore, is that many of the winners have faltered, and we don't have a long list of newcomers to take their place. Folks who are looking for giddy sentiment need to understand that we had giddiness already, two weeks ago, when the Investors Intelligence readings tagged 15% bears. Those levels likely won't be reached again, because for that we'd need all these momentum stocks to start surging now. How likely do you think that is? Heck, the banks -- which acted great on Friday -- couldn't even manage any follow-through Monday. Folks are just too tired to continue chasing.


In Top Stocks, Helene puts her 20+ years of experience in technical analysis to work for you. Take advantage of Helene's time-proven approach and her action-oriented analysis of technical indicators. Try it now. Get a 14-Day Free Trial.

Columnist Conversations

View Chart »  View in New Window »
this chart is showing great bullish signs here, we like this to take out the old high shortly. ...



News Breaks

Powered by


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.