April 10 Another Collapsing Breadth and Downtrending Stock Update

Apr 10, 2014: 12:25 PM CST

We’re seeing another sharp rotation of money flow out of stocks as seen by price itself and the rotation into defensive sectors again.

Let’s start with our mid-day Sector Breadth Grid to assess the damage (and opportunity):

If we go back to intraday updates from “April 7th Collapsing Breadth” along with “April 4th Reversal Day,” we’ll see a similar picture of relative strength concentrating in the “defensive” or Risk-Off Consumer Staples ($XLP) and especially Utilities ($XLU) sectors.

While it’s not stellar, 52% of S&P 500 Utility stocks and 43% of Staples stocks are positive mid-day.

Zero Materials stocks, two Industrial Stocks, one Health Care stock, and four Financials stocks are up at the moment.

This suggests we should continue focusing on the weakest performing stocks in the weakest sectors for short-selling (retracement or breakdown) intraday or swing opportunities as price continues to trade within the well-defined rectangle boundaries (earlier post update).

Potential short-sell retracement or “Trend Day” candidates to the downside include…

Zions Bankcorp (ZION), PNC Financial Services Group (PNC), former high-flyer Gilead Sciences (GILD), and Cabot Oil and Gas again (COG).

While I was tempted not to include any winning or bullish stock, here are potential candidates:

Hewlett-Packard (HPQ), McDonalds (MCD), IBM, and Chesapeake Energy (CHK)/

Unless we see another stellar intraday reversal, continue focusing on the relative weakness names and shorting them as the sell-off continues.

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Corey Rosenbloom, CMT
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