The old saying “a rising tide lifts all boats” doesn’t always apply to the stock market, and MoneyShow’s Tom Aspray examines the charts of four stocks that have sold off heavily despite the market grinding ever higher.

The major US averages had a choppy session Wednesday as after making new highs early in the session they moved in and out of positive territory. The A/D ratios did close positive with the Nasdaq 100 and Dow Transportation Averages showing the best gains as they were up 0.40% and 0.38% respectively.

The European markets are seeing heavier selling early Thursday with the German Dax Index down 1.3% in early trading. This is consistent with the negative technical readings that I discussed in Tuesday’s column.

The stock index are also down significantly in early trading ahead of the jobless claims. A daily close in the Spyder Trust (SPY) below $151 should signal a decline to the more widely watched chart support in the $149-$149.80 area. This could be the start of the February Surprise and watching how the market acts at stronger support should provide more insight.

As stocks have pushed to the upside, several stocks have seen very heavy selling and they have some common technical characteristics which helped warn in advance of their declines. Let’s look at three of these recent disasters and one stock that may be ready to drop sharply.

Click to Enlarge

Chart Analysis: Cliff Natural Resources (CLF) not only reported very weak earnings but also reduced its dividend by 76%. The stock dropped almost 20% on five times the average volume.

  • This was consistent with the negative weekly and daily technical outlook discussed in 3 High-Yield Disasters last September.

  • The weekly chart shows that a head and shoulder top was completed in May when CLF closed below the neckline (line a).

  • Once below the late 2012 low at $28.33, the next long-term support is in the $23.30-$25 area.

  • The weekly relative performance broke its uptrend (line b) in September 2011 and then rebounded back to its declining WMA.

  • This was the start of a long-term downtrend and the RS line has made lower lows, line c.

  • The daily relative performance (not shown) dropped below its WMA last week.

  • The three-year uptrend in the on-balance volume (OBV), line d, was broken in the spring of 2012.

  • The OBV did rebound back above its WMA in December but will drop back below it this week.

America Movil SAB de CV (AMX), the Mexican telecommunications giant, also missed its earnings Wednesday. AMX dropped 9.3% on volume of 30 million shares, which was four times the daily average.

  • AMX had rallied in early 2013 back towards the daily downtrend, line e, in the $26 area.

  • The lows from November have been decisively violated with next long-term support in the $20.60 area.

  • A break of this level would complete a major long-term top formation.

  • The daily relative performance has formed lower lows since last September (line f).

  • By February 7, the RS line was clearly below its WMA (line 1).

  • The daily OBV briefly surpassed its resistance, line g, in early February and in four days was back below its WMA.

  • The first strong resistance is well above current levels at $24.50-$25.50.

NEXT PAGE: One Stock Shows Ominous Signs

Tickers Mentioned: Tickers: SPY, CLF, AMX, PVH, DPS