The S&P 500, Nasdaq and Nasdaq 100 are hitting new all-time highs today due primarily to strength in Alphabet (GOOGL) and some other big cap technology names like Apple (AAPL) and United Technologies (UTX) .
Under the surface the market isn't nearly as buoyant and there is some good reason to be concerned about the lackluster price action in many places. The Russell 2000 ETF (IWM) is trading very poorly and is down over 0.5%. Breadth is running about 3600 gainers to 3200 decliners which is not very impressive. Speculative action in general is quite poor and the biggest movers are just a mishmash of random names with no strong themes.
This morning I listed some of the positive news that is out there but ultimately it is the price action that matters the most. If we don't have better price action than this when the news is quite positive there is some good reason to be more cautious.
For almost two weeks now we have had lackluster momentum and stock picking. Probably the easiest way to see that many stocks have underperformed is to look at the percentage that are trading over their 200-day simple moving average. According to the T2107 indicator on Telecharts only 56.7% of stocks are trading over their 200-day simple moving average. Back in late January when the Nasdaq and S&P 500 were at lower levels this indicator hit 66.6%.
I'm not liking this price action much and it has prompted me to put on some index shorts into the strength. I started some ProShares Ultra Short S&P 500 (SDS) and have left plenty of room to add to that position.
I'm not calling a market top but the poor action in so many stocks when we have good news and strength in the indices is worrisome. I'll be looking for new buys of individual stocks but there just isn't much acting well enough to entice me at this time.
(Apple and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL or GOOGL? Learn more now.)
