Is the Stock Market Rally Starting to Crack? $SPY $QQQ $BITA $CMCM
Five years plus depending if you look at 2009 or potentially 2011, this is an old bull market. I have heard repeatedly from investors we are now in a “New Secular Mega Bull Market”. I am so glad they know. I sure do not. I take it day by day with a complete trading plan. No predicting, just reacting and trying to stay out of big trouble. What transpired yesterday could be a fore barer of some potential real trouble.
The Nasdaq led the way lower with a loss of .87% while the SPY lost .65%. They both closed at their lows of the day, which is a bad omen. Volume was higher across the board so there was distribution on all the major averages. This is the second distribution day for the indexes and now I am carefully watching for a gathering of more distribution days. Leading stocks got hit worse than the overall market with the leaders index falling 3.03% on higher but slightly below average volume. Much of the large decline was caused by large declines in Chinese stocks, particularly $BITA and $CMCM. One must always watch the leaders as they will lead the market either up or down.
The market is starting to show the first real signs of cracking since we began the current up trend. We must see some solid advances on good volume to show that big institutional investors are not abandoning the market. If that doesn’t materialize the rally could be showing signs of real trouble.
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