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Why It's Now Time to Be Bearish


The top nine reasons for downside bias in today's stock market.

Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

The Wedge has now resolved to the downside! It made a ton of sense as I made my list of the top reasons why we were leaning to the downside.

Some reasons for my downside bias:

  • Five days of market distribution having IBD putting us in a market correction earlier this week.

  • Copper under pressure -- usually a leading indicator.

  • Semis under their 50-day moving average -- this is the heartbeat of tech.

  • High beta tech lost momentum -- Google (GOOG), Baidu (BIDU), Amazon (AMZN), Netflix (NFLX), etc.

  • Oil Services HOLDRs (OIH) seems to be breaking the upper range -- if it can get and stay below 158.

  • The hot optical group is in the penalty box -- Finisar (FNSR), JDS Uniphase (JDSU), etc.

  • The agricultural group rolling over and technically breaking down.

  • Oil still holds over 100.

  • Europe making headlines again about its problems. These have been ignored with the sexier headlines out of Libya

Below is a close-up of the wedge in SPX and macro snapshot on the next areas to watch. I hope you've trimmed down positions and came in net short. It wasn't the exact set up that we would have liked. But those prepared are not in harm's way today and we can "embrace" this volatility for opportunity.

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No positions in stocks mentioned.

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