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Market Bears Make It Two in a Row Despite Increased Volume

Stocks in this article: SPY XLU XLY JBLU INTC SOXS SMH

NEW YORK (TheStreet) --Can you believe it? The stock market is now down two days in a row.

The DJIA finished down 109.69 points to close at 16734.19. That is two consecutive 100-point losses for the DJIA. The S&P 500 was down 13.78 points at 1930.11. The Nasdaq was lower by 34.30 at 4297.83 and the Russell 2000 index was down 7.31 at 1159.40.

The most interesting fact Thursdaywas the volume on the S&P 500 Trust Series ETF (SPY) crossed over the 100 million-share mark for the first time since May 20. I am not sure if it is coincidence or not but the stock market on that day happened to close on the downside with increased volume, too. The DJIA was down over 100 points on May 20.

I will say again the major selloffs in the market happened to be with increased downside volume versus the up days when the market volume is much lighter. This matters to me even though most Wall Street pundits shrug it off.

The question now becomes, is this the start of a major downside trend or just a short-term selloff for the bulls to reload? I have no idea. This stock market in 2014 has been much different compared to the last couple of years.

The utilities continue to lead on the upside. The Select Sector Utilities ETF (XLU) is up 11.3% year to date while the Select Sector Consumer Discretionary ETF (XLY) is down over 2% YTD.

The correct story in 2014 has been to be long the slow-growth bonds and anything that is similar to slow growth. The 10-year Treasury yield has crashed to a new year-to-date low on Thursday of 2.42% and anything inflation such as food or energy is up 8% year to date.

So I will continue to be patient and opportunistic in my trading. Even though we have a had a nice two-day selloff in the markets, I am still having a very difficult time finding extreme oversold stocks, both large-cap and small-cap stocks alike.

The hedge funds seem to be rotating from one sector to another. The most popular sectors right now continue to be the semi-conductors and social media.

After the close of trading, Intel (INTC) increased its guidance so I expect the semi-conductor sector to continue to be the go to momentum trade on Friday.

As long as U.S. Inflation is accelerating and the U.S. consumer is slowing along with a housing slowdown, traders and investors need to be cautious. There are some serious headwinds out there.

Friday is a free chat at if anyone cares to join in and view internal algorithm screens.

At the close of trading on Thursday, I sold some Direxion Daily Semiconductor 3 (SOXS) and covered my Market Vectors Semiconductor ETF (SMH). My final JetBlue (JBLU) short was also covered for a nice gain.

At the time of publication the author was long SOXS and short BRCM.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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