The indices continue to hold quite well, but once again breadth is running negative and the number of stocks hitting new 12-month highs is shrinking. Right now, there are about 130 stocks at new 12-month highs and 120 near new 12-month lows. That hardly sounds like a market sitting at record highs.
Breadth is running about 2200 gainers to 3300 decliners, but I see quite a bit of red on my momentum screens. There has been some good pockets of momentum in the thin action, but today I'm seeing some sizeable reversals in stocks that have been the big winners lately. A few examples are Juipai Holdings Ltd (JP) , The Trade Desk, Inc (TTD) and Sarepta Therapeutics, Inc (SRPT) .
I often write about reacting to market action rather than trying to anticipate it. The first thing I react to is the action in the individual stocks I'm watching. When there are a number of them struggling, that triggers an increase in defensiveness. I want to tighten stops and be careful with new buying.
Once I deal with individual stocks, I'm going to start considering some index shorts as a way to further hedge. That has been very tricky in this market that never seems to gain downside momentum, but I'm watching now to see how fast bounces are sold and how things close. A weak close would be a sign that something is shifting.
The amount of red I'm seeing in the individual stocks that I follow has me concerned. If that holds into the afternoon I'll be doing some repositioning.