Slush Puddle Market

In the wake of an historic east coast blizzard over the weekend, stocks are responding much in the same way local (secondary and tertiary) roads look, beyond the infamous New York City slush puddles.

Simply put, we are looking at a sloppy morning of trading, with most stocks spinning their wheels. Crude oil is working off some of its rally from last week, with the USO ETF negotiation the $9 level as we speak.

TWTR has fumbled one opportunity after the next to stage a counter-trend rally, with news of an executive shake-up this morning yet another reason to continue its strong downtrend.

In addition, the DHI post-earnings weakness drives home an important concept we have been discussing for Members for quite some time--Most stocks tend to move in sympathy with the broad market and their respective sectors, too.

Specifically, this means that the homebuilder D.R. Horton had been holding up well as recently as December. However, as we noted last month, the XHB (sector ETF for homebuilders) had confirmed a major top, and many other homies were rather weak.

Hence, as tempting as it was to go long DHI solely based on its own chart, the larger forces in play at least diminished the odds of a swing long working successfully. In fact, DHI followed its peers lower and now has the look of yet another leader gone by the wayside.

Oftentimes in speculation, the losses you avoid are bigger wins than the winning trades themselves.