Sunday, March 02, 2014

Indices Stall Again Friday Leading Growth Stock Reverse On Heavy Volume

Over the last two weeks, early week strength has faded by Friday and the indices have suffered five distribution days, mostly in the form of stalling. On many days, the market has opened strong only to fade around noon and sell off to new lows of the days. The complete opposite of the previous two week in which the indices sold off early, but rallied strongly into the close.

On Friday the market continued its bearish action, opening strong only to fade around noon and sell off to the lows of the day. Stalling on news Russia was mobilizing troops on the Ukrainian border. Late day buying masked the overall underlying weakness.

Leading growth stocks lagged from the open on Friday and suffered their worst selling since the market bottomed on February 5th on heavy volume. Many stocks are now too extended to consider for more then a day trade. Recent breakouts are on the verge of failing or have failed to follow through and new setups are scarce and have lagging relative strength lines.

The action in recent days is similar to the action the market and leading growth stocks experienced during December and January which led to the last minor pullback, and should have forced traders closer to cash but still holding a few positions.

Considering the recent cluster of distribution and poor action in leading growth stocks, traders should consider tightening stops further and allow the market and leading growth stocks to pull back and re tighten before getting aggressive on the long side. Short traders should be on the lookout for potential entries on attempted rallies.
Post a Comment