NEW YORK (TheStreet) -- I told you so. I told you traders and investors needed to prepare themselves for lower stock prices ahead.
This was based on in-depth, detailed analysis of where the market indexes are right now. My internal algorithm process is able to point out when the indexes are in overbought or oversold territory. When you couple those numbers with stock index prices that have been moving higher on lower volume, you have a situation that warrants extreme caution.
Chasing the stock market higher is not a recipe for success. Quite the contrary. Traders and investors are taking on substantial risk without realizing it.
On Friday, the stock indexes reacted in an unsurprising way. The DJIA closed down 140.19 points at 16361.46. The S&P 500 was down 15.21 at 1863.40. The Nasdaq lost 72.78 points to close at 4075.56 and the Russell 2000 was down 21.32 at 1123.03. This was all happening with increased downside volume.
For the year to date, the DJIA is down 1%, the S&P is flat, the Nasdaq is down 2.4%, and the Russell 2000 is down 3.5%. I have mentioned that 2014 will be the year of volatility and we have not been disappointed. This has been a stockpicker's market -- unlike 2013, when everything seemed to go higher.
Do not expect to see anything different as we move forward the rest of the year. The majority of big-name companies have reported earnings and the results have been mixed. The momentum stocks of 2013 are no longer the leaders in 2014. Facebook (FB) shares have given all their gains back, post-earnings, just like Netflix (NFLX).