Breaking the Parabolas

Maybe the market "wants" to go lower. Isn't that the theme of the day? We shook off the opening weakness quickly and then went higher, only to run into a brick wall of no new money in.

I keep hearing "profit-taking," and I have to admit when I looked at the charts this weekend, I blanched. In my chart book, for instance, one of the first stocks is 3M (MMM - commentary - Trade Now) (the numbered stocks are put up front). I looked at it and I said to myself, "This is one of the most overextended stocks I've seen in ages."

Boom, the darned thing gets hammered at the get-go. The retailers seemed badly extended and next thing you know, Best Buy (BBY - commentary - Trade Now) catches a meaningful downgrade, and pow! Same with VF Corp. (VFC - commentary - Trade Now), some of which I sold last week for Action Alerts PLUS after a huge run.

Once you get the reversals going, a la JPMorgan (JPM - commentary - Trade Now), it's awfully hard to get 'em reversed again, particularly given the radically extended nature of so many stocks. Given the bad news out of State Street (STT - commentary - Trade Now), I guess we should be glad that all banks aren't being hammered. However, this Goldman (GS - commentary - Trade Now) shellacking is mighty painful. You can't take as much solace as you would like, even though it is up huge. Just hurts too much!

So, we get a rollover.

We are due, and we need to get some fear, we need to get those charts to look less like parabolas and more like stair steps. Maybe that's what today's really about.

And no more than that.

At the time of publication, Cramer was long JPMorgan, Goldman Sachs and VF Corp.

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