Markets staged bearish action Tuesday with the Nasdaq taking the worst technical hit. It was up near 3/4’s of 1% in the late morning and early afternoon hours only to stage a poor reversal, finishing down .4%. It recorded a bearish outside day off the round 4400 number. The S&P 500 fell more than the Nasdaq losing .6% and it as well put up a negative outside day. Now who knows how this will turn out. Short term are we in need of a pullback? Of course. The S&P 500 could pull back toward its 5o day SMA and still look solid near the round 1900 handle. Remember that market tops traditionally form with lots of volatility, and this could be the start of that, but overall we have seen very little of it. Utilities led the way Tuesday, and perhaps a tell going forward some of the best groups recently were among the laggards, that being energy and materials. Transports also fell with leaders like CP falling 3.5%. Being the optimist that I am, I tend to search for names that sidestepped the weakness and displayed good relative strength. They could be a good tell going forward. Homebuilders did gain on some positive data out in the premarket, and with the recent strength in the financials could this be signaling some impending muscle in the group. One of my favorite names continues to be TMHC. A entry can be initiated with a buy stop above the 200 day SMA at 22.

This article requires a Chartsmarter membership. Please click here to join.