By: Scott Redler
Checking in from the road today, I see that we now have two distribution days within four sessions. This is not a good sign for the market. A third distribution day within a seven day period puts the uptrend in jeopardy. Intel (INTC) reported blowout earnings, yet the stock opened and traded lower. JP Morgan’s (JPM) earnings were a nice beat, but the revenues came in short. The negative reaction to the earnings in both key market stocks indicates a larger sentiment shift. The market came into earnings season with high expectations.
When a company like Intel handily beats and cannot trade up, you know that something important has changed in the market. We said just the other day that it is now time for a cautious approach and the market continues to confirm that notion.
Couple this development with other technical factors, and the market looks very vulnerable in the short-term. Google (GOOG) is once again below its 50-day moving average. Apple (AAPL) opened higher and not only could not hold onto its gains, but sold off aggressively. Support in the S&P’s from Tuesday’s sell-off stopped the bleeding for now, but let’s see if that continues to hold.
