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While the broad market puts in what appears to be a rather orderly day of consolidation, those high growth leaders and trader favorites since 2009 continue to deteriorate. I charted AMZN last night (as well as CIEN) as a short setup, and the online megastore is pushing down towards $190, which I believe would be a key level for the bears to break below. In addition, CRM PCLN WYNN are weak. While the bears would be out of line getting cocky here, it is tough to see the market rallying hard into 2012 with those stocks breaking down, as they are on the verge of doing so now.
On the other hand, the transportation stocks have been surging of late on very strong buy volume, as reader “EvanBFI” pointed out on my blog last night. In addition to the steady stream of rumors and headlines out of Europe that still seem to have a major impact on market moves, there is no clear nor obvious path yet. We have yet to establish any type of discernible trend for more than a few days, and the bulls have much more to prove even after rallying the prior six sessions. Just as the bears would be getting out of line in being cocky here, so too would the “Santa rally” bulls. The better bet is considering both longs and shorts, willing to go with the flow of quick market turns and managing risk effectively.
