This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Rally? So What? The Stock Market Is Still Trending Bearish

Stocks in this article: SPYVRTXOIFLOKOGLUUBPOP

NEW YORK (TheStreet) -- I missed out on all the downside fun Tuesday. As the DJIA, Nasdaq, S&P 500 and Russell 2000 are all now in "Trend Bearish" territory, it was no surprise to see the markets get whacked.

As I have been writing about for quite a while, Tuesday's total U.S. equity market volume was up 15% versus its one-month average. Again, on down days the volume accelerates and on up days the volume decelerates.

Wednesday was an up day in the markets as we saw a small relief rally with decelerating volume. The S&P 500 Trust Series ETF (SPY) saw volume come in at over 94 million shares. That was down from the 152.6 million shares traded on Tuesday.

Read More: 10 Stocks Carl Icahn Loves in 2014

The DJIA had a gain of 13.87 points to 16443.34 and the S&P 500 saw a fractional gain to 1920.24. The Nasdaq was higher by 2.22 at 4355.05 and the Russell 2000 gained 3.99 points at 1125.55.

The machine-driven hedge funds now are looking for opportunities to sell the market as it goes higher. This is quite the change from the bubble days of just a couple weeks ago when the hedge funds were looking to buy any selloff.

As a trader, you need to adjust your way of viewing the market. Many support levels have been broken to the downside. Three of the four major indexes are in bearish territory, both from a trading perspective and a trend perspective. This needs to be recognized.

As additional proof, the German DAX has entered the 10% correction zone since peaking July 3 and Italy peaked in June and is now down 13%. Europe is a train wreck.

In addition, Core Logic estimates that home prices rose 7% year over year in July, a deceleration versus +7.5% in June and +8.3% in May. Home price appreciation is slowing.

Thus, there are many indicators out there to confirm the "Growth Slowing" thesis. It will only get worse as the stock market continues to fall.

That does not mean that buy side opportunities do not exist.

The DJIA, S&P, and Nasdaq are all in oversold territory. I am looking for that upside trade and rally. I have no short or overbought stocks on my scan, large or small. Without question, the next move is higher or to the upside.

When the rally occurs, as traders we need to understand that profits need to be taken because of the character and trend change in the marketplace.

Since I was not available on Tuesday, I did sell my long positions in Vertex Pharmaceuticals (VRTX), Owens Illinois (OI) and most of my Flowers Food (FLO) on Tuesday and Wednesday, all for gains.

Read More: S&P 500 Posts Another Day of Chop as We Wait for Bases to Build

I added new long positions in Popular (BPOP), Coca-Cola (KO) and Glu Mobile (GLUU) on Wednesday. BPOP and GLUU have extremely oversold numbers and KO was a channel break higher momentum play. All can be found at www.strategicstocktrade.com.

 

At the time of publication, the author was long FLO, BPOP, KO and GLUU, although positions may change at any time.

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,399.67 +19.26 0.12%
S&P 500 1,904.01 +17.25 0.91%
NASDAQ 4,316.0740 +57.6360 1.35%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs