Market Continues Post-QE3 Slide

A strange thing happened to the market on Tuesday. It got smacked by a day of institutional selling. It was bearish price action no matter how you slice it, but is it a sign of more to come? The day's action raised a yellow flag -- not a red flag -- and that's an important differentiation.

The selling was partly attributed to unrest in Spain over austerity measures as well as comments made by Philadelphia Federal Reserve Bank President Charles Plosser.

Plosser basically said that the latest round of quantitative easing by the Fed won't do much to help the economy. This is nothing new from Plosser. He's been hawkish for some time and hasn't been all that supportive of the Fed's recent actions.

Despite a bearish day for the market Tuesday, it might not be a reason to head for the sidelines just yet. Institutional selling remains well contained in the market. The Nasdaq Composite only shows two meaningful percentage declines in higher volume since August 21. If higher-volume declines start to increase in frequency, it will most definitely cause problems for the uptrend. There hasn't been enough of it yet. Meanwhile, most leading growth stocks are showing little in the way of sell signals, another feather in the bull cap.

That said, now may not the time to be aggressively putting money to work. It is, however, the time to pay attention to what investors currently own. A quick scan of 12 holdings in the Ultimate Growth Stocks model portfolio showed 12 stocks holding above key support. This is encouraging.

That said, Apple (Nasdaq: AAPL) showed disconcerting price action Tuesday. It took out its 20-day simple moving average (SMA) with conviction, falling 2.5% to $673.54. Volume was above average at 18.5 million shares. It normally trades about 14.5 million shares a day. Nine million shares traded during the last two hours of trading. Going forward, a trip for Apple to its 50-day SMA around $645 isn't out of the question. It would take some dire market headlines for Apple to undercut its 50-day line -- not a likely scenario.

Meanwhile, luxury brand Michael Kors (Nasdaq: KORS) was under pressure Tuesday after the company priced 23 million shares at $53, but it continues to hold above its 50-day SMA at $48.27. On a weekly chart, its 10-week SMA is at $50.40. Shares closed Tuesday at $52.30, down 4%, but it remains far from a broken stock at this point.

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