Institutional investors were selling Thursday, not good to see so soon after the Nasdaq Composite confirmed a new uptrend on June 15.
It definitely calls the viability of the rally into question, but keep in mind that one day of harsh selling doesn't mean the uptrend is over. It's clearly under pressure but not dead yet.
Volume on the New York Stock Exchange and Nasdaq rose from Wednesday's levels, but wasn't overwhelming to the downside. NYSE volume was pretty much average at nearly 858 million shares. Volume on the Nasdaq was also average at nearly 1.74 million shares.
I've been testing the waters in recent days, but that's about it; a few small positions here and there but nothing too aggressive. In hindsight, that was the right strategy. The Nasdaq's buy signal last week was tepid at best. It would've been silly to ignore it, but I knew that a bona fide new uptrend was far from a sure thing, so I didn't want to take on too much risk.
Technical breakouts in high-quality growth names were looking good for a while but not so much anymore. Under Armour (UA) turned tail quickly after its recent breakout over $102.86. Shares crumbled 6.4% Thursday to $98.47 in huge volume. UBS downgraded the athletic apparel maker to Neutral, citing signs of a slowdown in sales after a strong early spring.
Meanwhile, I had to cut ties with healthcare IT firm Cerner (CERN) yesterday because of its awful price action over the past two sessions, where it lost 8.3% in heavy volume. The stock hit an intraday high of $88.32 on Tuesday. Shares closed Thursday at $79.70, down 4.6%.
Just recently, Cerner had the look of an emerging leader. I initiated a position on June 12 and added to it six days later when it broke out over $84.10 in strong volume. The add-on buy raised my average cost basis to $81.52. Before long, I was sitting on short-term gain of 7.9%, but the breakout failed miserably, so I sold yesterday at $81.75.
Despite Thursday's bearish performance overall, I'm still watching several growth names with potential here. Recent new issue The Fresh Market (TFM) fell 2.8% Thursday to $51.73 in light volume. It closed right at its 50-day moving average. I wouldn't be surprised to see buyers come in and support the stock here. Earlier today, Piper Jaffray upgraded the upscale grocer to Overweight from Neutral. I'll continue to watch this high-quality stock for renewed signs of institutional buying. If big buyers come in and support the stock at its 50-day line, it would present an opportunity to start a small position.