…two to go. on july 11th, i posted the following:
“for now, i continue to favor additional downside in the markets and i am still positioned net short but i do own a few select longs as well. i am now giving my shorts a little more “swing trade” bias here and continuing to take quick profits on most longs. one group of stocks that i am monitoring are what i call the “untouchables”, those stocks which both the retail and institutional crowd has been enamored with and are (mistakenly) considered “can-do-no-wrong” safe-havens by the masses; names like AAPL, CMG, PCLN and AMZN. from a longer-term perspective, all of these stocks look to me that they may have possibly already topped, although it’s still too early to say with any degree of confidence. for now, the near-term technicals remain mixed, although i continue to believe that the longer-term charts remain bearish, hence my (slight to moderate) near-term bearish bias.”
remember, market tops are a process, not an event. as the case has been made here and elsewhere, i’m sure, market breadth and other measures of broad participation of stocks on the rally off the june 4th lows has been telling us that fewer and fewer stocks have been carrying this market higher. historically, when we start to see the market leaders starting to be taken out back and shot one by one like this, that has often signaled the early stages of institutional distribution (i.e.- the precursor to a market top). yes; BTFD is still the M.O. de jour as of june 4th and yes; the intermediate trend is up until proven otherwise but the fact that we are finally starting to see some of the leading stocks crumble one by one only adds to the longer-term bearish case.
i’ve updated the daily charts on those 4 untouchables below. also note the recent weakness in some other leading stocks recently such as SPG, MCD (active short), FDX, etc… of course, this is far from a no-brainer, all-in short market as many other big names such as HD & WMT continue to trade not far off their multi-year highs. the trend is still up and until proven otherwise, consider keeping some dry powder or long-side hedges if net short. i also continue to favor trading the most attractive individual setups vs. the broad market (via etf’s, futures, options, etc..) finally, i continue to monitor the $VIX, which has continued to remain above the 7/19 lows, put in nearly 3 weeks ago as the market has continued to push to new highs.
