Dr. Kris'  Instablog

4:00 pm ET: Children of the '70s will remember the Moody Blues' classic song "Ride my seesaw". That tune pretty much sums up recent market action: one day up, the next day down. Daytraders have been very happy riding this seesaw, especially the volatility exchange-traded vehicles (XIV, UVXY, etc.). High VWAPs (a measure of institutional trading) on both the positive and negative sides indicate a power struggle between the bulls and the bears. My crystal ball isn't telling me which side is going to win but typically increasing volatility in the volatility index (VIX) denotes a changing of the guard. I think the "Sell in May" phenomenon is still on track.

Another reason to think the bears will step into the drivers' seat is the continuing advance in defensive stocks. Today, new highs were made in Consumer Staples (XLP) and Utilities (XLU). Real estate investment trusts (REITs) also topped the leaderboard. Note that all of these vehicles pay dividends and tend to be less volatile than other equity sectors.

That's it for now. Have a nice weekend!

Subscriber Notes: There are three new Stock Darlings (all dividend payers) and one new Channeling Stock.

4:00 pm ET: The market continued yesterday's decline yet somehow the S&P, the Russell 2000, and the Dow Industrials managed to hold key levels--barely. The rise in volatility, though, suggests that these levels won't hold for long. Many sectors are testing support levels and the bad news today was that the Information Technology etf (VGT) broke a key support level at $70. [The next support level is at $65, FYI.] The breakdown in this fund reflects the continuing decline in Apple (AAPL) which comprises over 17% of the fund's holdings. Other heavyweights include IBM (7%), Microsoft (7%), Google (6%), and Oracle (5%). All of these issues traded in the red today which only compounded the VGT's malaise. The IT space has been the recent darling of the market and it's due for a breather. If you're long this etf, I'd suggest taking profits or protecting your position as Apple appears to be heading towards its next support level at $350.

Bearish Trade Ideas: Closing the Gap
One chart pattern of great interest to technicians are price gaps. They occur when a stock opens either over the previous day's high or under the previous day's low. The gap suggests further movement in the opening direction and there are times when the stock reverses back to the previous gap point. If a break through the gap occurs, the technical convention is for the stock to continue to fill the gap. When it does so after rally, the move is viewed as bearish.

Today, Synchronoss Technologies (SNCR, $26) entered a large gap created on February 11th. The gap area is from $24.75 to $27. With the share price currently around $26, there's still about a buck and a quarter's worth of expected downside. There's another smaller gap just above $22 and we could see it close that gap, too. Bears may wish to jump on this one but please do your due diligence first!

4:00 pm ET: The market took another dive today on heavy volume. Monday's down day was also marked by heavy trading whereas in the past several months, sell-offs were light. What this means is that the bears are trying to cut into the bulls' dance card, and if the downward trend in the market leading Dow Transport Index (DTX) is any indication, they may succeed. However, they're not cutting in without a fight. Today, the bulls were able to stop the decline just in time for all of the major averages (excepting the DTX) to close above recent support levels. However, they may not be able to prop up the party too much longer and a break in current levels would mean that the bears are taking over. Specifically, these support levels are the following: S&P 500 (SPX) 1500, Dow Industrials (DJIA) 14500, Nasdaq 3200, and Russell 2000 (RUT) 900. Moreover, mounting volatility is a sign that the sentiment is shifting, so be careful out there!

Today's Bearish Action: Steel on the slag heap
Virtually all commodities have been hemorrhaging but none more so lately than the metals and miners. Adding to the ongoing slide in gold and silver, the steel etf (SLX) finally joined the club by breaking major support at $40. If you have a long position in this instrument, it would behoove you to monitor it closely. A further decline in price and I would recommend exiting the position entirely or at least buying protective puts (but please note that the SLX's option field is not very robust).

That's it for now.