NEW YORK (TheStreet) -- Two days of gains in the DJIA and the S&P 500 were wiped out in Tuesday's trading. This stock market is not for the amateur trader or investor. The stock market in 2014 is quickly becoming a hit-and-run type of market.
Do not overextend your stay.
The DJIA lost 137.55 points to close at 16374.31. The S&P 500 lost 12.25 points to close at 1872.83. The Nasdaq was down 28.92 to 4096.89 and the Russell 2000 was off 16.53 points to 1097.90.
The biggest common denominator in trading was the increase in volume as compared to the two most recent up days. Once again, the volume on these selloffs is much higher than the up days. I have been mentioning this theme for a while now. It is important.
There is a liquidity factor, in this case the lack of liquidity on the down moves. Traders and investors need to take notice of this fact. The news media is not at all concerned about this. As long as the market is moving higher everything is just fine. I am here to tell you that it is not fine. Volume will matter when you least expect it. It will matter on the down moves. They will become more vicious and rapid in a market that lacks liquidity.
Even though the Nasdaq was down 29 points on Tuesday's trading it could have been much worse if not for the momentum-chasing hedge fund community. We have seen this movie over and over again. The Netflix (NFLX), the Yandex (YNDX), the Yelp (YELP), and the Amazon (AMZN) hedge fund chasers continue to buy the highs.
I am here to tell you that this movie is nearing the end once again. We are within a day or two with those stocks rolling back over. They are all approaching extreme overbought conditions according to my algorithm process.