Major averages finished flat to lower on mixed volume. A number of leading stocks took deep hits. When the market pulls back even 1-2%, leaders can take it on the chin by losing a lot more. So while the major averages look mild in terms of yesterday's action, leading stocks tell a different story.
Futures are lower by about half a percent at the time of this writing after a 10-day string of record gains in the Dow Industrials Index as well as European markets.
Yesterday saw a significant change of character among a broad number of leading stocks. Among those on our Focus List:
AGX was a sell on Monday per our comments on over the weekend. The stock had violated its 50-day moving average and then rallied back up into the line, providing investors with a convenient out point if it could not hold at the line.
AKS failed to hold its 10-day moving average, failing on its recent bottom-fishing pocket pivot.
BOX violated its 10-day moving average but found temporary support at its 10-day moving average. Anyone using the Seven-Week Rule would use this as a selling guide. This could get worse depending on whether markets find a floor soon or we push into an extended correction.
X failed on a recent breakout attempt, further highlighting the risk of buying breakouts in a market where breakouts produce little in the way of sustained upside in the vast majority of cases.
FCX gapped down on Tuesday but had already violated its 50-day moving average on Monday, so it became a sell at that point. It has moved lower over the past two days.
MOS broke down hard through its 10-day and 20-day moving averages, and is now set to test support at its 50-day moving average.
NVDA gapped below its 50-day moving average on heavy volume. We've already discussed this as potentially morphing into a short-sale target per our discussion in the prior two weekend Focus List Review report.
Investors should remain alert to the possibility of more Focus List names breaking support, and prepared to act accordingly, in a swift and decisive manner.