Recent deterioration in the short-term technical outlook for key indices means now more than ever, investors must take decisive action to lock in recent gains and avoid aggressive buying.

The markets were clearly disappointed early Friday as more cracks developed in Greece’s debt deal. Still, most of the major averages managed to close higher on Thursday. Over the past week or so, the correction camp (those looking for a pullback to buy) has become quite crowded.

This is likely the reason why the market has been grinding higher as late buyers abandon their disciplined strategy and just buy. Many of the market-leading sectors like housing have continued to move higher and have become even more overextended. Further new all-time highs in Apple Inc. (AAPL) have also helped fuel the excessively bullish sentiment.

The latest American Association of Individual Investors (AAII) sentiment survey shows a 7%+ jump in the number of bulls, which now stands at 51.6%. According to Investors Intelligence, over 52% of the newsletter writers are also now bullish. Though neither reading is high enough to suggest a major top, they do raise a further caution flag. (See the results of MoneyShow.com’s latest sentiment survey here.)

The weaker relative performance of the Dow Industrials and Dow Transports suggests that the more speculative sectors are gaining favor. This combined with some deterioration in the short-term technical outlook suggests it is time to tighten your stops and lock in some profits.

At the end of today’s column, you will find a summary of all my executed positions since last October along with the recommended stop levels.

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Chart Analysis: The Spyder Trust (SPY) has closed higher for the past three days after successfully overcoming the 127.2% Fibonacci price target at $133.39 last week.

• Daily Starc+ band is now at $136.90 with the 2011 high at $137.18. The major 78.6% retracement resistance calculated from the 2007 highs is at $138.26
• The NYSE Advance/Decline (A/D) line has made further new highs this week and is well above the July highs (line c), which were surpassed in December
• A/D line is well above its rising weighted moving average (WMA), which is consistent with an overbought market
• The McClellan Oscillator did a good job of signaling the 2012 rally by breaking its downtrend, line d
• The break below the uptrend on the McClellan Oscillator support (line e) is also a sign of weakness. It may drop below zero on Friday if stocks are down
• Rising 20-day exponential moving average (EMA) is now at $131.90 and there is good chart support in the $130-$132 area
• A close below the low at $130.06 will suggest a drop to $128.30-$127.20, if not the flat 200-day moving average (MA) at $125.95

The iShares Dow Jones Transportation ETF (IYT) has declined for most of the week while many of the other major averages have continued to make new highs.

• The daily chart shows a potentially bearish rising wedge formation, lines f and g
• A drop below support (line g) will suggest a drop back to the 200-day MA at $89.50. Calculated from the recent highs, the 38.2% support stands at $86.60, which is over 8% below current levels
• RS line has dropped below its support, line h, signaling that it is underperforming the S&P 500. The weighted moving average is also starting to turn lower
• OBV has broken its uptrend, line I, after forming a slight negative divergence at the recent highs. A lower close Friday would turn it even more negative
• There is initial resistance now at $95.40-$96 with stronger resistance in the $98 area

NEXT: Weak Dow Performance Raises Warning Flag

Some S&P 500 companies have reported huge European revenue gains despite the ongoing debt crisis, while others have been hit quite hard. Here are two from each category.

While US investors in the last quarter feared a new recession triggered in part by the ongoing European debt crisis, US companies were still making money in Eurozone nations. A recent article in The Wall Street Journal reported that of the 39 companies in the S&P 500 that reported sales to Europe, revenue was up 11.4%.

Compared to 2010, the 2011 sales to Europe were a bit lower, but still accounted for well over 24% of the global revenue of the 39 companies. (See the report here.)

Apple Inc. (AAPL) was one of the big winners, as the company reported a 55.1% gain in revenues from Europe, followed by a 31.5% increase from Caterpillar Inc. (CAT). On the other side of the ledger is Western Digital Inc. (WDC), whose revenue from Europe dropped 32.3%, and Linear Technology Corp. (LLTC), whose European revenue was down 28%.

Looking at the performance over the past year, it is no surprise that Apple leads the pack, gaining 33.1%, followed by Caterpillar, which is up 14.3%. Western Digital was also higher by 11.3%, while Linear Technology lost 2.9%. Those stocks with deteriorating trends in European revenues may be more vulnerable to selling as the year progresses.

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Chart Analysis: Apple Inc. (AAPL) was up sharply again on Wednesday, gaining 1.7%. The weekly chart shows that prices are getting closer to the weekly and monthly Starc+ bands in the $480-$484 area.

• There is also trend line resistance, line a, just above $480
• The relative performance, or RS analysis, broke through resistance, line c, in July 2011, signaling that AAPL was again outperforming the S&P 500
• The on-balance-volume (OBV) is back above its weighted moving average (WMA) but has not yet broken through the bearish divergence resistance at line d
• There is first support now at $454-$460 and then stronger support in the $430 area. The weekly uptrend, line b, is in the $390 area

Caterpillar Inc. (CAT) has made little upside progress this week and is now near the 2010 highs of $116.55. The weekly Starc+ band is now in the $118 area.

• The RS line moved through its weighted moving average at the end of October and then dropped back below it in December
• The RS overcame stronger resistance, line f, in January, confirming that CAT was a market leader
• Volume has been strong over the past month, as the OBV has moved through its downtrend, line g, and its weighted moving average
• There is first strong support now in the $98-$104 area

NEXT: Two Stocks Hardest Hit by Slow Eurozone Sales