To paraphrase Groucho Marx, who are you going to believe, the indices or your own eyes? If you just glanced at the indices, it looked like an uneventful day. But under the surface, it was ugly.
Apple (AAPL) was a laggard today, which caused the Nasdaq to underperform. But there was no shortage of key stocks acting poorly, such as Google (GOOG), Baidu (BIDU), Priceline (PCLN), F5 (FFIV), Salesforce (CRM) and others. A few names like IBM (IBM), Verizon (VZ) and Merck (MRK) helped the major indices, but there was carnage in metals, coal, oil and steel.
As I discussed earlier today, markets that have just made new highs don't suddenly collapse. Tops take a while to form and there is usually chaos as volatility picks up and money rotates from more speculative groups, like small-caps and gold, into defensive names, such as MRK and Wal-Mart (WMT).
I'm not predicting that this is a market top, but the action suggests a higher level of caution is needed while things develop. We all know this market has had a tendency to reverse upward just when it seemed to be on the verge of breaking down. Obviously, the bears are extremely anxious for some downside after being deprived for so long. The fact that so many market players are ready for and anticipating downside is a big part of why we have action like we saw today, where the indices don't do much even though market players are skittish with their holdings.
For three years, the hardest thing to do in this market is call a top. We keep running up despite vocal bears and questionable technical conditions. I don't expect it to get easier. The tough part is that you have to be willing to chase to stay in this market, and that can be very tough if you are disciplined.
We have some issues to deal with, but they haven't advanced to the point of major concern. Vigilance will be the key going forward.
Have a good evening. I'll see you tomorrow.
More from James "Rev Shark" DePorre: