Leaders In Retreat:
When the leaders start to show fatigue, that is a good sign that markets weakness is coming to a head. The generals are often able to somewhat brush off market instability, and when they do not it should be a sign of concern for investors. Add to that the Nasdaq’s volatile behavior, with 2 of the last 3 sessions recording intraday range of at least 500 handles, and it could be a harbinger of things on the horizon. Wide and loose trade are hallmark bearish characteristics, and is also the definition of topping demeanor. Remember bottoming action is the exact opposite with taut, long rounding action. One of the reasons for concern amongst leaders is the action in the chart below of ROKU. It is now quickly into bear market mode, more than 20% off most recent 52 week highs, with the vast majority of that coming this week as the stock is lower by 18% heading into Friday. This is a time to play defense, and be small with plenty of cash on hand. Doing nothing can sometimes be your best strategy.