Apple shares are down 6% in after hours trading, which is likely to put a damper on stock prices today. Meanwhile, the S&P 500 was up, but breadth, or the number of stocks participating in the rally, was weak indicating that smart money is selling into strength.
The Dow remains below resistance and yesterday carved out its 4th reversal bar in as many days.
There is still potential for stock prices to trade higher before they correct, which makes us a bit nervous on the short side, but given poor behavior in the leadership group and given that some of the stinkers out there are catching a bid, and the fact that breadth is waning here while bullish sentiment nears extremes, we are more inclined to look for a correction than we are to get on board new long positions at these elevated levels.
If prices can correct in orderly fashion we'll be the first ones stepping back in to buy, but right now we believe playing the long side is like picking up rolls of quarters in front of a steam roller. The guys who bought AAPL yesterday before the closing bell can attest to that.