New signs the market rally may be over

How should the typical investor interpret this information? With caution.

By Benzinga Mar 24, 2014 3:38PM

Image: Stock market (© Zurbar/age fotostock)By Joel Elconin

There is always someone trying to call the top in the market. 

Obviously, you won't know the answer until time has passed and the market significantly moves in the opposite direction. Remember the March 2009 bottom? It was not officially recognized as the bottom until several months (or years) later.

So in an attempt to be in front of the mainstream media, who will praise every decline as an opportunity to "buy the dip," let's examine a recent series of events that may be indicating the five-year rally may be over.

To begin with, the ridiculous amount of buying that took place on last Friday's Quadruple Witch Expiration, both on the open and close, resembles an "Upside Capitulation." As the S&P 500 Index reached new all-time highs off the open, the market spent the remainder of the day in full retreat, closing near the lows for the day.

This trading action was highlighted in great detail during Monday morning's Premarket Prep. Among the discussion was how the enormous buy imbalances from Friday's Quadruple Witch Expiration forced the S&P 500 Index to a new all-time high (1883.97).

Several major issues opened at their highs for the day and never sniffed the opening print for the remainder of the session.

More importantly, instead of rebounding from Friday's rout, after a higher open the index has plunged through Friday's low. Unless the "buy the dippers" from Friday's close took advantage of the higher open Monday morning to exit their longs, they too are under water and will be looking to exit their losing positions on rallies.

Another characteristic of the aging bull market has been its ability to balance the shifts between sectors.

In other words, when the momentum stocks are hot, you can identify the move out of blue chips and into the momos. On the other hand, when the momos begin to tire, money moves out of them and into more conservative stocks.

There is always a sector picking up the slack, so that each decline is masked and the overall market is still perceived as "healthy."

On Friday and Monday, this has not been taking place. The momos are getting killed after Friday's rout. Google (GOOG) is lower by another 32 points after shedding 14 points on Friday. Tesla Motors (TSLA) is lower by 16 points after losing six points on Friday. Netflix (NFLX), the king of momentum stocks, is lower by 31 points after losing 19 points on Friday.

Facebook (FB) is lower by three points in Monday's trading and now changing hands some eight points from its all-time high ($72.59). Twitter (TWTR), which lost its momentum long ago, crashed through the major support at $50 and has entered an area with very little support until $45.00.

Another huge momentum sector getting destroyed is the biotechs. The darling of the last few years is following through on Friday's rout with more selling. Biogen (BIIB) is lower by 17 points after declining 28 points on Friday. Celgene (CELG) has declined eight points during the last last two sessions and is over 30 points from its all-time high ($174.66). Gilead Sciences (GILD) has had a more orderly sell off, but has lost 10 points since March 13. Amgen (AMGN) is now off its all-time high (128.98) made last Thursday by 29 points.

While these stocks are deeply in the red, so are many of the financials and other blue chip stocks. The best barometer of value stocks would be Berkshire Hathaway (BRK.B), which recently broke out to new all-time highs. But this stock is trading lower as well, down $0.90 at $124.30. If the broad market goes into all out retreat, Berkshire may not find any support until the area it broke out from at $120.00.

It may be too early to determine if we have indeed seen the top, but there are a few things that investors should keep in mind over the next few days.

Can the market quickly recover from its recent rout? At this time, the S&P 500 Index futures has found temporary support at its March 19 low (1842.50). It will be important for the index to maintain this level and rebound to Friday's close (1857.00).

If not, the index will surely test the Ukraine-Russia turmoil low spike at 1823.50, which coincides with several lows in the index from late February. Beneath that level, there may not be any major support in the index until its February 5 low (1725.00), which is 100 points lower.

So how should the typical investor, who may not pay attention to daily fluctuations in the market, interpret this information? With caution. Take a good look at your portfolio over the last five years and attempt to identify levels where you may want to lock-in profits, if the issues in your portfolio do indeed decline.

More from Benzinga

Mar 25, 2014 7:43AM
"After 5 years of democrat occupation of the USA: 51 million people on food stamps, 92 million people out of the workforce, poverty at a 50 year high, salaries at a 20 year low. Never vote for anti-American socialist democrat filth Ever." 95Yay and 75Nay

What has been rather remarkable and therefore destructive of America's Society as a whole has been this type of Propaganda. That along with RAP music and the Filth now seen on TV these Days. It has slowly but surely Dumbed Down America to the Point that soon we won't matter to anyone but ourselves. Our Moral compass has shifted severely off path. I blame both parties.

Of course we have a Record number of Folks in Poverty not only here, but Globally as well. As the Wealth and Wage divide has Widen, fewer folk with the most wealth at the top and a whole lot more folks at the bottom. That's basic Math, that's basic Economics101. So as more Folks here and Globally inherit an Right to Work far Harder for Less Society dictated by the top 1%, Globally Poverty and folks out of work rising will continue. Stupid, Dumb, and Naive will always tell you otherwise. So far, that is 95 Morons and counting.
Mar 24, 2014 10:25PM

Market rally over? Maybe , since the Federal reserve is responsible for pumping it up !  Natural law suggests that every bubble will pop and this one will too? The big question is will America be prepared for it ? I doubt it since they've been lulled into believing the good times will never end.

Meanwhile we have a 17.6 Trillion Dollar debt 91 million people not in the work force and half the country receiving some sort of Federal Assistance. Still this crowd will tell you "it's all good".

Mar 24, 2014 11:26PM
 I see a lot of people are confusing the government with Wall Street. 

Wall Street has purchased our government - mostly the Republicans because they love the system and are in agreement with Wall Streets values - but they own both parties - yes even the tea party Republicans - the system has been set up so that candidates can't get elected without Wall Street.

 Wall Street is never satisfied, they want your Medicare dollars, Social Security dollars, your 401K until there is
nothing left - it is all consuming.
They are counting on the stupidity of Americans to keep choosing R's of D's to bicker against each other and name call while they steal the rug out from underneath you but until we wake up - if we ever do - we will be responsible for our own demise.
Mar 24, 2014 3:48PM

What next... 11 banksters globe-wide have committed suicide recently. We can all see the jagged attempts to correct free-falling by printing more and more fake money without a stitch of actual real economic growth. There are 90 million under and unemployed and that's an old estimate. The fake rich don't want to return to Reality.

War? Not sure. Crash? If we don't we get war.

Mar 24, 2014 3:50PM
The world owes more than $750 TRILLION in phony money. Maybe instead of crashing or war, we just need to-- close the banks, end the Federal Reserve and get RID of Wall Street. There is no such career as Financier.
Mar 24, 2014 7:04PM
Only an amateur journalist with near-zero market expertise would write this rubbish, and only the imbeciles at MSN would bother posting it.  No one, and we all know that NO ONE, can accurately predict or "time" the market.  Likewise, NO ONE, other than a fool, would give this article any more time than I've taken to refute it.
Mar 25, 2014 8:32AM

Ya gotta love how liberals have only one economic metric they can point to as having done well under Obama, and that's the stock market.   It's really quite ironic, considering that they are forced to point to something they really hate, Wall Street, but have absolutely nothing else they can put forth as a positive in this economy.  


I'm always amused when a liberal tells you how great the stock market is doing on the one hand.....and how evil Wall Street is on the other.   The fact that they can't see their own hypocrisy not withstanding, and with NOTHING else which they can point to, it must really grate on them to be politically forced to have to resort to cheering Wall Street, when they make their disdain of that institution so clear at every other opportunity.   It really is a fascinating juxtaposition to watch.

Mar 24, 2014 7:51PM
The reason it will end is the same reason it began. QE welfare. Yep Obozo debt and trillions for wall street..........Oddly the drooling stupid moron obozo voters.... still hopeful and waiting for change.
Mar 24, 2014 6:21PM

Crazy....I just scroll by most of the bullshidt...

Most of it means little to me, and NONE of it is going to change my life...

I'm not fond of falsehoods or lies, and seldom make rock hard projections without reasoning or facts that I believe to be true; If I have had no personal experience with...

Although I may miss-state something sometimes, or forget what I said about something trivial.

I usually own up, or in a few cases may change my perception or admit my mistake..

Unimportant BS is exactly that, non-important BS....arf, arf.

Mar 24, 2014 8:50PM
Gee, sell in May and go away is happening in March and it's no April Fool's joke.
Mar 24, 2014 5:58PM
Mar 25, 2014 10:05AM
So where do these people think everyone is going to take their money?  Bonds?  Don't think so...
Mar 25, 2014 2:15AM
Don't buy the crap propaganda news sources is posting are posting. The Russians and China can bury the USA dropping the USD, they are funding our debt. Check out about the Ukraine/Crimea debacle. The war hero McCain poses w/al-Qaida in Syria and now fascist in Ukraine w/puppet government. Go see don't take my word for it. 
Mar 25, 2014 11:17AM

What's all the fuss about ? Didn't you expect VOLATILITY through the 1st & 2nd quarters ?


For one thing, it's tax time-DUH ! You're not going to get much new sustainable investments coming into the markets right now & and on top of this, there is more consumer debt now (actually, this came from consumers x-mas shopping they couldn't do without) which most will use their tax returns to pay down- well maybe half. So as 4/15 draws closer, you'll see increases in energy, utilities, and infrastructure. Stay away from Europe & emerging markets through June-to much uncertainty there.


V_L- why do you constantly want your own industry to fail or close? Don't you want to get your lending job back? With statements like yours every day- you deserve Fat Cat's 'litter' thrown at you.




Mar 25, 2014 10:22AM

I had to go back and look at the Article, to determine what this was about...

Couldn't really tell from many of the comments...??

I didn't know Liberals hated Wall St...I thought both Libs and ****serves both invested.??

Has QE done any good ? Yeah, probably.. Are we gonna pay down the road? Yeah, probably..

Have the Markets and Stocks went up? Certainly...Has the Economy improved? Certainly...

Are most all "indicators" pointing to a better Recovery..Yeah, unless you have not been watching.

Is there going to be a correction in the Markets? Yeah, probably.

Are the people that whine, cry and bitch constantly; Non-investors?  Yeah, probably..

Mar 25, 2014 10:17AM
Be careful folks, yes, we are up about 120 on the Dow but we have seen this before; yesterday and Friday to be exact....Manipulators populating the floor and as you know things can change in a NY minute....Not trying to be Mr negativity but we call it as we see it...More later.
Mar 25, 2014 10:46AM

I'm assuming Joel (Mirhaydari) Elconin, is Antman in disguise....??

Brent how do you keep track of all those names...??

Fatty if you are going to follow me around and make snidey little quips; I'm gonna troll you in, and start talking about "your Momma."

How much did you say she weighed now, on the slaughter house scale...??

arf, arf, arf....

Yup no sense being Mr. Negativity, CGT....It ain't gonna rain on my Parade.

Mar 25, 2014 10:36AM

Be careful my azz, We were making a partial trade this A.M. from yesterday after extending the sale price...

I was beating my brains out this morning, changing the trade or limits 3 times in the last minute or so before the open...

On the third time of changing it sold, and we made an extra $180 accidently..It covered "one penny" under the "new 52 week" , and I couldn't get the third trade in...

Now it has dropped back about a $100 or so bucks...Now I understand why day traders take Tums and Mal-lox....Be careful my azz....An extra 180 in 20 seconds...That's $32,000 per hour..

Being careful is for "sissies" working down on the floor...

Mar 24, 2014 8:12PM
Sometimes cowboy policy does not work in economics. What is to come will change the economic landscape indefinitely. The Russian - Ukraine crisis should not be overlooked by any means. Aggressive sanction against Russia could seriously undermine the west and especially the US. The Russians are not the old Soviet Union thinkers. These are new young breed who could size the moment to collapse inward and begin to do everything themselves and even create their own circle of finance like G7. They will get enough partners to go alone that does not want to see US dollar dominate the world. So we may be in for the unexpected outcome that could undermine our economics. Probability say so!!
Mar 25, 2014 9:18AM
Ya gotta love how folks continually Label folks as Liberal without a freaking clue to what most folks actually are. Most of us have problems with Obama just as we had with Bush and most other Government Officials. Wall Street, Stocks, and Corporations are the Economy, prove otherwise.

This along with the FED are who and what determines the Trickle up or down effect not only here, but globally as well. Ya gotta love how some posters talk about the Economy yet are always clueless about how it actually works. Not only is it fascinating to watch, it's also alarming to the extent which it has gone without being held accountable. That will only add not to just the eventually failure of our Economy but just how deep it will fall. Talking about Hypocrisy, first some posters need to actual understand what it means.

Most folks CHEER when their Investments are going UP, regardless of Party affiliation, Dumb, Stupid, and Naive will tell you otherwise.

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