A House of Cards

Did I really hear a staunch fundamentalist on CNBC say on Tuesday, when confronted with some negative data points, that "fundamentals don't matter now"? I almost fell off my chair.

And on the same show someone else opined that there was no way we would have a correction between now and the end of the year.

So volume doesn't matter. Divergences don't matter. And now fundamentals don't matter. And keep in mind the seasonal trade is on the table since we, as it is said, "always rally into year-end."

Let's think about this seasonality factor for a minute. We were supposed to "sell in May and go away." That didn't work. And then there was the fear of September. That too didn't matter. But since all those seasonal trades didn't work, we should suppose this one will? Curious, isn't it?

Do you recall about two months ago when everyone thought the market tell was Goldman Sachs (GS - commentary - Trade Now)? Well, now that Goldman hasn't done much, Goldman doesn't matter either.

When do you think Apple (AAPL - commentary - Trade Now) will stop mattering?

It seems to me that one by one we're taking away all the reasons that matter(ed). I suppose that is the way it is the higher we go; if the reasons don't confirm the uptrend, then they no longer matter. I can see it now: One day the dollar will rally and the market won't go down and soon the dollar won't matter either!

Isn't that how a house of cards works? You keep removing cards that don't matter until you finally remove one that does.

Away from that, about a week or so ago I showed a chart in Columnist Conversation of the Bank Index relative to the S&P 500. At the time everyone was so negative on the financials and I suggested that we often came down to these trend lines and bounced. The alternative was to break the trend line and bounce. In other words, when you've come that far in a straight line, the chances of a bounce coming right near that trend line grow.

You can see the ratio actually bounced off the trend line Tuesday. So yes, I think that means the game of group rotation will eventually fall on the shoulders of the financials. The regional banks are already starting to perk up more than the big names.

As for the market, we are still overbought. We still have divergences with the advance/decline line and the new highs. And this is still expiration week. Therefore, I have not given up the thought that the market will get a whack sometime this week. Something has to make that guy who said we would not have a correction in the next six weeks -- six weeks!!! -- rethink his view!

---

For more explanation of these indicators, check out The Chartist's primer.

---

Know what you own: Meisler mentioned Apple. Related tech companies are Microsoft (MSFT - commentary - Trade Now), Hewlett-Packard (HPQ - commentary - Trade Now), Dell (DELL - commentary - Trade Now), Google (GOOG - commentary - Trade Now) and Palm (PALM - commentary - Trade Now).

---

At the time of publication, Meisler had no positions in any stocks mentioned, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information, click here. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback; click here to send her an email.