A Grand Illusion

The action was slow and the indices did nothing, but what made it even worse was that momentum stocks continued to fall apart. While the indices were boosted by dinosaur names like GE (GE), UPS (UPS) and Procter & Gamble (PG), the stocks that have led recently continued the struggle that kicked in Friday.

The bulls tell us that it is a healthy rotation and nothing is wrong with the indices, but they are wrong if they think that some big-cap defensive names are going to take the place of Facebook (FB), LinkedIn (LNKD) and Baidu (BIDU). The tricky part is that the indices still haven't done anything wrong. If you just glance at the SPDR S&P 500 (SPY) or iShares Russell 2000 (IWM), it looks like things are chugging along without a worry in the world. It is very deceptive if you consider what is going on in individual names. This action has pushed me into raising cash and taking a more defensive posture....1022 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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