Three of the stronger stocks in the entire market to close out 2011 were Google, MasterCard, and Visa. However, even they are now flashing signs of caution, starting with Google’s reversal today after clearing the widely-watched $630 level last week. With so many eyes (including mine) watching Google for the big move, it was tough to chase the initial breakout. Even if Google is not completely reversing lower with today’s action, the threat of a violent shakeout was too menacing for me to buy it last week. Moreover, the stock printed a weekly shooting star candlestick last week, and is obviously building on that with the downside action today.
MasterCard sold off on heavy volume last week after a steep advance, which is almost always a sign of at least short-term caution for me. Here, again, we may not be witnessing a major top, but instead a violent shakeout. That said, caution is still warranted until we see bulls come back in to place a strong bid underneath the stocks.
Finally, Visa is looking heavy as it bases along here. I would keep stops tight on this one, as it could easily follow MasterCard lower off the righthand side of that base.
In sum, I am still not seeing clear leadership in this market. The biotechnology stocks are acting well today in light of the INHX news, but apart from that there are just very narrow pockets of strength, which is generally insufficient to sustain an uptrend. I am still open to the idea of a general drift higher, but that probably means I am going to have to be as selective as ever.