State of the Stock Market - 10/6/10 (Be Careful Right Now)

I have an engagement tonight so today's post will be short - no charts.   We saw a choppy session today on Wall Street, and one where the Nasdaq drastically underperformed the rest of the indices.   Volume was lower.  

I ended my post yesterday with the following sentence - "I have a feeling we could see some very high volatility this week (as we already have the past two days) so do be careful out there."  I didn't realize it would be so true today.   I was bullish after yesterday's performance (who wouldn't be) but as I look at my scans today, I am very much neutral to slightly bearish.   Yes, that's a quick turnaround, but it is what it is.

I see a lot of bearish moves today in leading stocks.   My long watchlist (not buy list, just stocks that I keep my eye on for one reason or the other) was at 246 today.   As of 3:53, 75 of those 246 had down moves of 3% or more today.   Most came on heavier volume.   When I see stocks like CRM (which luckily I was stopped out of at $109.40 today) completely fall apart today, I begin to get worried.   The damage I see on individual stocks is much worse that the overall market numbers will make it seem.  

Here's the list to check out - MELI, ACOM, INFA, EBIX, NTAP, CTXS, RHT, FIRE, APKT, OPNT, ISLN, VMW, RVBD, VMW, FFIX, RAX.    There are more but looking at these should give an idea of what I am talking about.   Today looks like major distribution in these names (the real leaders of this past rally) and that is not good.   

I talked about gold yesterday and its parabolic move - it gapped up slightly today again as the dollar fell further.  One of these days (perhaps very soon) this move will reverse and it will not be pretty over a short-term time period.   If it happens, I think the market will get hit as well.

I am still long IDSA but as of now, that's it.   With what I see going on today, I am most likely going to sit back and do nothing the next few days.   I am a LOT more bearish than I was yesterday and I would be very careful here.   Perhaps we will just see a rotation occur right now out of tech and into commodities, but it's not like commodities aren't extended - they very much are.  I hope I am wrong, but I will not be surprised to see some major selling come into this market very soon.   We'll see the rest of this week.  Take care and good luck Thursday - be careful.