Profit taking leads to pullback

Post thanksgiving the market has been in pullback mode. Most momentum leaders continue to reverse or pullback. Breadth has been deteriorating again after a brief attempt at recovery.

The market had decent run post resolution of debt ceiling fight. But now is losing the momentum. The sentiment indicators are again at extremely bullish levels.

http://www.schaeffersresearch.com/streetools/market_tools/investors_intelligence.aspx

Extremely bullish readings do not immediately result in turn but there i often a delayed reaction. The excessive bullish readings are not translating in to blow off kind moves. If you look at the Stockbee Market Monitor readings of 50% plus month, you will see them at a range of 7 to 17, which are not at all high. Readings above 20 indicate excessive bullishness on those columns. We have not seen those kinds of readings for months.

Which makes this a small moves rotational market. Breakouts are happening but post breakout moves may not be of big magnitude.

One good breakout candidate from yesterday's breakout scans is CWEI. It is a thinly traded stock. Float is just around 6 million. Last couple of breakouts have been successful with 20% plus moves post breakouts. Volume was high on breakout. It has a potential for 20% move if breakout works.

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