Stocks Cough Up Friday’s Gains as Trade Slows Significantly
August 31, 2010 | Comments Off
Super Light Trading, but Stocks End at Lows – Cash is still King
Following up on Friday’s gains the market gave a good chunk of the gains back. The selling really began after the release of the Dallas Federal Reserve manufacturing index fell more than expected. Although an improvement from last month’s reading the number disappointed and sellers took over. Volume at preliminary look was the lowest for this year which calls into question the big percentage decline. However, the steep decline and ending at the lows of the day does put a very negative spin on the day. Today was not your prototypical consolidation day and this market still needs more to prove itself even with leaders holding up well.
Top Current Holdings And Total Returns
August 29, 2010 | Comments Off
Currently in portfolio: longs: 17 (20-25% of accounts) shorts: 10 (less than 5% of accounts) cash: 75%
ticker symbol – date of purchase – total return
longs:
LCUT 124% 11/2/09
JKS 99% 7/13/10
PWER 29% 7/7/10
RDCM 26% 8/2/10
RES 16% 7/13/10
NR 13% 7/20/10
RDWR 10% 8/17/10
shorts:
KSS 13% 5/13/10
LM 12% 7/27/10
Stocks Reverse as Fears about GDP Embolden Sellers
August 27, 2010 | Comments Off
A better than expected jobless claims figure did help ignite excitement in the early morning session. But this excitement did not last for very long as buyers simply went to the wayside as GDP revision hangs over the market. Volume ran lower throughout the day and ended about 10% lower across the board. Selling did accelerate into the close and the close suggests selling pressure may step up in the morning. At the very least, the action today was on light volume, but we’ll need to see support rush into the market to avoid further downside.
Tomorrow morning we’ll finally get the much anticipated GDP revisions and although economists expect the figure to be 1.4% it appears the market is expecting something sub 1.4%. We can let the stock market pundits debate over how slow the growth will be and while they are distracted we can pay attention to how the market reacts. If we get this market to turn higher with an explosion of volume it will be a tell the market is ready to perhaps make another run higher.
This summer has been filled with lots of action yet we have been unable to produce a sustainable trend. It isn’t a surprise as many bottoms do not occur unless it is August, September, October, or March. Major market bottoms tend to be in August, September, and October. It wouldn’t surprise us to see a meaningful bottom show up in the next few months. Let’s not forget this correction began back in late April and is now 4 months in length. Market corrections tend to last between 3-9 months and with this correction now 4 months in duration a bottom should not be far off. For this reason, we need to be prepared if this market turns.
More Weak Economic Data but Stocks Stage Reversal
August 26, 2010 | Comments Off
The day began at 8:30 am with weak reading out of durable goods orders sending futures lower. Economic data would get even worse with new home sales plummeting much lower than the flat reading that was expected. At the open, volume and price were both lower across the board but with the new home sales data stocks dove to their lows of the day. Once again, like Tuesday support rushed back into the market pushing stocks higher. This time buyers were able to keep the major market indexes in the green finishing just off the highs of the day. Volume put a damper on the day as it came in lower than Tuesday’s action suggesting institutions weren’t eager to support the move. More economic data is on the way including GDP revisions Friday may keep institutions on the sidelines for the time being.
Stocks Fall as Housing and Economic Worries Worsen
August 25, 2010 | Comments Off
Another weak session with sellers dropping the hammer on stocks at the end of the trading session. Existing home sales accelerated the selling after its release at 10am EST. The report showed a drop of more than 27% month over month sales figures highlighting weakness in the housing market. Without the government propping up the market home sales are falling back to normal levels, thus getting on with the much needed correction. Quickly, buyers stepped up shortly after the reaction to the housing figures. However, it would not last too long as late day selling completely eroded the gains from mid-day. End-of-day selling added to the fear of a stock market collapse as cash remains king.
Dog Days of Summer Sale!!!
August 23, 2010 | Comments Off
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Stock Market Ends at its Lows of the Day in Light Trading
August 23, 2010 | Comments Off
Melt-up Monday did not disappoint traders in morning trading as stocks pushed to highs around 10am. Unfortunately, weakness crept into the market as buyers seemingly went on strike for the remainder of the day. Summer time trading was in full effect as volume was extremely light coming in 24% lower on the NYSE and 13% on the NASDAQ. The market ended on its lows as sellers found very little resistance with the light volume. Not a very good ending to the day as price action weakened and this market continues to issue caution to the wind.
Light volume is the normal phenomenon during the summer time months, but we continue to see a lack of volume come in on the upside. All we really need to see is volume higher than the previous day to show accumulation. At the moment, we have yet to see flashes of accumulation common with healthy uptrends. On the downside we have seen volume surge like last Thursday. We need to see this trend change and it will begin with accumulation building.
Apple Computer (AAPL) suffered more selling and continues to act weak. The stock has been under distribution since the end of April. Although the stock made an all-time high in June it came on light volume and was followed up with heavy volume selling. Today the stock broke down on volume higher than Friday’s level even with the help of options expiry! This stock, which is makes up 6.8% of the NASDAQ will continue to drag on the index.
Economic Data Sparks Selling as Volume Swells
August 20, 2010 | Comments Off
Traders were focusing on economic reports and it kicked off with jobless claims. The market was dealt a blow with economists were expecting to see claims figures down 475,000, but claims rose to 500,000. Futures reacted negatively, but the market was waiting on the Philly Fed index and leading indicators. Stocks began to make a move lower ahead of the release suggesting a surprise to the downside. The surprise was the drop in the Philly Fed index dropping to a negative 7 reading showing a slowing in growth. Dropping like a rock the market plunged to the lows by noon time and found a bit of support late in the day. However, the last 30 minutes of trading sellers took over again sending stocks near lows of the session. Volume swelled across the board as institutions stepped up and sold stock. Today highlights the fragile state the market is in and cash remains king.
Late Day Selling Knocks Stocks off Their Highs of the Day
August 19, 2010 | Comments Off
Early morning selling gave way to buyers pushing stocks to their highs just after one in the afternoon. Sound familiar, indeed yesterday’s stocks flashed highs just after one in the afternoon only to give way to sellers. Once again, the market pulled back from its highs made in the early afternoon hours finishing just above the mid-point of the session. Volume ran lower across the board as institutions were uninspired by the market’s performance to jump back into the market providing the much needed boost. The market’s added to its gains, but without proper follow through we still will proceed with caution.
M&A Activity Gives the Market A Boost
August 18, 2010 | Comments Off
The market got an initial jolt from Potash who received an unsolicited bid for a takeover. In addition, weak housing data fueled speculation of a housing bottom as the numbers weren’t that bad. Volume didn’t get going until after 10 o’clock when buyers stepped up and pushed the market higher up until mid-afternoon. NASDAQ volume was up 7% on the day, but NYSE volume was up 22% thanks in part to the fertilizer group lead by Potash. Late day selling did put a cap on the excitement, but overall the day went to the bulls with stocks ending just above the upper end of the range.
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