Saturday, May 4, 2013

They Don't Ring A Bell At The Top

We've seen this movie many times before with one lethal exception. In the past when market "breadth" (i.e. number of stocks moving higher) started declining, eventually the market topped out, before breadth bottomed out (point "2", below). This time, the market has just powered higher - relying on fewer and fewer stocks along the way. Which is another way of saying that most stocks are already well into decline and the few that aren't - defensive stocks - are way over-owned so there is every reason to believe that lower levels will bring out sellers rather than buyers.

Leaders, like the Utilities: