Some stocks have come too far too fast
A brutal retreat may be in store for some industrial and rail shares that have had a prolonged advance from last year.
A thrust too far. That's how so many of the charts feel today, almost as if the charging bull-market armies overshot their supply lines and now are isolated way in front of their old lines without ammo. That means they are ready to be encircled by bearish attackers, with a retreat to the 30-week moving average -- a brutal retreat -- in the cards.
I feel that way in particular about the big industrials that have shot up so much so hard, like Parker-Hannifin (PH), that couldn't deliver what was wanted no matter what.
Anything that has had a prolonged advance from last year seems so vulnerable that you can hear the stock charts saying, "Pull back, regroup."
There are anomalies. General Electric (GE) feels a year behind these players and is building a solid advance. Really solid, and it looks like it can hold and run. Maybe even to $22.
But far more problematic are the rails, like Union Pacific (UNP) and perhaps CSX (CSX) today. UNP is truly on point as it ran last week into earnings and then sold off, even though it was clear the company did nothing wrong but hire people and try to capture all the business it needed. These are high-quality problems. They are, however, problems.
Post continues after video:
It's what afflicts gold, which has still not found its footing as January drags on. Barrick Gold (ABX) and Agnico-Eagle (AEM) look like they are breaking down, further along in the retreat process, although I like them both.
And, of course, the hardest hit, the most advanced, are the highest-multiple stocks, which seem like they are all rolling over.
I doubt they are. The lower they go in advance of earnings, the higher they are likely to return. I just want to make it clear that anyone looking at the charts is acutely aware that many of these stocks have come too far too fast. The only safety may be back at the 30-week moving average -- a 2% to 4% decline from these levels.
At the time of publication, Cramer had no positions in the stocks mentioned.
Follow Cramer's trades for his Charitable Trust.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
An interest rate tease in The Wall Street Journal sends the market into an optimistic tizzy -- but one that doesn't end quite at the top.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.