Pullback Deepens

Pullback Deepens

Stocks moved lower on Tuesday, extending the pullback from recent highs. Trading picked up as money appears to be shifting out of index names. Leading stocks generally dropped, but not the usual 2x pace of the market. In fact, there were plenty of leaders that moved higher or held strong. Biotechs were flashing buy signals (OTIC, ZFGN, etc.) or were extending recent buy signals (SCMP, RCPT, BLUE, etc.). I just couldn’t bring myself to buy such risky names in a questionable environment. The no-earnings speculative plays are always capable of being cut in half overnight. Even a solid earner like AKRX can get nailed pretty good – on bad news, as it did today.

So we are down 3-5% from recent peaks, with plenty of distribution around. But once again, we have indexes that remain in their uptrends (Nasdaq Biotech, and most others that aren’t large caps). This has been a hallmark of the 2013-current run. My leaders list has not been forced out of a single name and the VIX remains modestly low. These non-confirming factors lead me to believe were are in another pullback that we should bounce back from. Of course, at some point this rally will end – hopefully with some clearer signals. In the mean time it’s important to recognize, and react to, the market’s ever changing cadence.

My allocation accounts remain in MDY, waiting for clearer signs that the uptrend has failed.

See more here: 

Pullback Deepens

See which stocks are being affected by Social Media

Share this post