Six Distribution Days, But Look At This…
The market has produced
overwhelming evidence that the safe place to be is on the
sidelines. We have seen six
distribution days since Dec. 2, as indicated on the chart below.
 
I would love to talk more about the positive things I see
in the market and how I think the economy and political situation will fix
themselves, but it doesn’t matter, because the market has spoken.
Not only have we seen the market post the necessary distribution to
keep us out, but breakouts have not made any headway.
Now we are starting to see some of the attempted movers get hit pretty
hard as any of their remaining supporters abandon them.
Scansource
(
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PowerRating) is one such
example. The stock tried to move out of
a double-bottom base with a pivot point of 65.91, but volume did not come in
to support the move. It was able to
gain a maximum of 16% before the stock felt the wrath of sellers.
 
Brown Shoe Company
(
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is the latest stock to attempt a breakout.Â
The company was able to close above its pivot point of 25.60 but faces
an uphill battle if the market does get hit.
 
If the sidelines are not for you, then you may look to
the short side of the market. Stocks
like Forest Labs
(
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PowerRating) may stand out.Â
After closing below its 50-day moving average on heavy volume, the
stock has drifted higher, but without the support of volume.
This name is one of the few that was able to remain above its pivot
point of 80.05, in part because the breakout occurred while the market was
still declining.
 
Some of the lagging ETFs or HOLDRs may be an alternative
to shorting stocks. Look towards the
weaker names such as the S&P 500
(
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PowerRating)
and Dow
(
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PowerRating).
In any case, the most important aspect of a market that has shown us
solid evidence that institutions are unloading shares is to preserve capital.Â
It is more difficult to make money during these times than a Bull
Market.
There’s nothing wrong with spending a little more time
shopping or honing our skills for the next Bull move.
Have a great weekend,