Wednesday, February 26, 2014

Indices Stall Wednesday Suffer Fourth Distribution Day

What was shaping up to be just another ordinary rally day, turned ugly around two o'clock when a major sell program hit the market giving up all the day's gains. By the close, the market mustered a small gain on higher above average volume. Registering another distribution day. Marking the 4th such day in the last seven trading days.


Leading growth stocks have suffered little damage over the last few days. But, many of the rally's biggest winners are potentially in the midst of climax runs, shorter term setups have had a hard time making progress, and leading growth stocks have become more volatile intra-day.

The number of warning signs is slowly adding up despite little damage in leading growth stocks. Considering how far along the bull market is, the numerous amount of potential climax runs and lack of new breakouts should put traders on defense. Traders should take profits in over extended positions and tighten stops on new positions failing to follow through or stalling.


Over the last few days, the short ideas list which has been dormant since the market bottomed on February 5th, has started showing sign of life. Several stocks have started to tighten up into potential short setups. Traders should review the list closely in case all the recent warning signs add up to a market top in the next few days or weeks.

Lions Gate Entertainment (LGF) has been lagging the market since September after running up around 400% in the previous two years. The stock is in the midst of forming a head and shoulder pattern. Look for a breakdown below the recent consolidation to confirm further downside under $25.

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