Monday, June 15, 2009

Morning Update - Lots of Breakdowns - Warning Signs Meant Something

If you watched the video last night, you know I mentioned I was a little more cautious here because of some of the breakdowns I started to see Friday in individual stocks. I mentioned these as possible "warning signs" for the overall market. Well, I guess those warning signs meant something, because I am seeing many more breakdowns today, and some follow-through on the breakdowns I saw Friday. Neither of those is a good thing for the bulls.

If you follow me on Twitter, you know that I was stopped out of both my long positions as both put in bearish failed breakout attempts (RAX and ICO). I liked both of these patterns and the fact that they failed so quickly is not a good sign. Here are some of the other leading stocks from the past few weeks that look like they are breaking down this morning:

KONG, CORE, TSRA, FREE, SEED, FEED, JCG, CSIQ, RTI, FRPT, HMIN, GROW, DDRX, ABAT, VM, PDO

As of now, the S&P is still holding support and even if it breaks down below 925, I don't plan on getting short anytime soon. I have a feeling there will be some whipsaws here for the bears as well just like we saw one for the bulls on Thursday. I would not be surprised at all of a bounce back into this range if 925 is broken. However, overall, I am not looking to go long based on these individual charts I am seeing - a lot of damage has been done.

Again, the key for me is not what the indices are doing right now, but what is happening with individual stocks. If we were indeed primed for another move higher (which last week I certainly though we were based on the charts), I would not see so many stocks breaking short-term support. I would not see so many continuation flag patterns turn into something different. So I am in cash now, and will wait to see what happens from here. If you have nice-sized profits, I would definitely consider locking some of them in. I will also start to get my shorts watchlist focused a bit more than it is now, because I am starting to think these warning signs are trying to tell me something. We shall see I guess. Good luck the rest of the day.

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