Joshua Hayes'  Instablog

End of the day action was the story of the day as sellers knock down stocks. At 3:30 in the afternoon the market appeared to be heading towards a solid day. Unfortunately for those who are long the market sellers had a different idea. Negative economic news from existing home sales certainly didn't help the market during the early part of the day, but wasn't the primary driver for the afternoon sell-off. We can certainly blame the turnaround in bonds or slowing China growth. Very good arguments there, but the real matter at hand is the price action of the market itself. Today's action constitutes has a stall day and we'll need to avoid any distribution if this market has any chance of continuing its uptrend.

Some positive news on the day there were some stocks holding up. The steady Eddy of the group (Leadership) is CMG. The stock continues to march higher, forget what you have learned from any other chart pattern. CMG is in a class of its own. PCLN is another leading stock that continues to push higher, but the stock is too far extended for entry. A few other stocks held up okay, but the late day selling does cast a least, for now a cloud of doubt.

The most recent II sentiment survey shows a big bounce in bullish investment advisors. 48.4% of respondents were bullish up from last week's, but what is striking is the number of bears dropping off. While not near March 2011 lows, we are getting real close with only 23.6% of investment advisors are bearish. Don't get me wrong, continued fiscal policies by the US Government will at some point impact the market. However, we trend followers know price will always be our guide.

For this uptrend to continue we'll certainly need to avoid distribution over the next few days. Any distribution would like signal further pullback. Let the market come to you, guessing we have topped here is no way to invest. Proper discipline and prudence is the best course for success.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.