When the market (=index) is strong, a lot of the breakouts tend to have a follow through. And when the market is weak, even uptrending stocks have a hard time sustaining their trend.
Do you guys sell a stock which seems to be holding up well just because the market made, say, a lower low or showed signs of weakness?
1) No. An index has to conform to its stocks.
2) A stock doesn't have to conform to an index.
3) Excessive pairs-trading can give lock-step correlation to the stocks in an index creating the appearance of coherent price behavior.