Pushing the Crisis in Egypt Aside, Stocks Rise in Lower Trade
January 31, 2011 | Comments Off
Volume drops, but stocks find buyers
Positive economic data helps stocks push higher, but volume lags as institutions weren’t in a hurry to jump back into the market. Better than expected Personal Income as well as positive Chicago Purchasing Manager helped push stocks out the gate. The market ignored the crisis in Egypt even as the sellers gained momentum shortly after the open. Even a late day blip the market was able to find buyers pushing the NASDAQ back above 2700 level. Melt-up Monday has proven its worth once again as stocks close in the green.
There wasn’t much umph to today’s action and volume proves the lack of conviction from institutions. However, there is something to be said about the first day of the month. Looking back, the first trading day of the month has been a successful endeavor if you were long the prior day. Now, this is no way to invest, but something we should be aware of. Odds are in favor of another positive day tomorrow, but then again in the short-term anything is possible. Stick to the price action of individual stocks and lead the guess work to gamblers.
There has been a lot of “top calling” over the past few weeks with the market appearing to be rolling over. At some point this heavy volume selling and light volume rebounds will catch up to the market and send the market into correction mode. However, trying to guess the precise top will only lead you to churn your account. We are going to wait for the proper signal to short prior to guessing a stock will move lower. Waiting for the proper moment, put the odds in our favor will yield us great success in the market.
NFLX Rises as Stocks Close Higher as Volume Slides
January 27, 2011 | Comments Off
After-hours action hurts AMZN but the trading day is full of positives
Disappointing economic data prior to the market open soured the mood on the street as Jobless Claims rose unexpectedly to 454,000. Durable goods orders and the Chicago Fed Nat Activity Index put in disappointing figures. Throughout the day the volume run rate continued lower throughout the entire day. Stocks flucuated throughout the day as the Northeast tried to dig out from ANOTHER snow storm. The NASDAQ was helped out by NFLX earnings report as traders pushed the stock higher. But, it was MSFT reporting fifteen minutes shy of the close posting better than expecting numbers. The stock created a bit of turbulence into the close as traders awaited AMZN’s earnings. Another positive day for the market has battled back from last week’s selling.
AMZN disappointed the street with disappointing revenues and sub-par guidance. At last check the stock was down 10% as the company guided operating income at $260M – 385M when the street was expecting $474.4M. Fourth quarter revenue came in light at $12.95B when the street was expeting $13B. Earnings were better than expected, but revenues and guidance were too much for the street to overlook at this point in time. The fall in the stock will certainly provide some negative at tomorrow’s open.
Traders Bid up Stocks for the 3rd Straight Day of Gains
January 26, 2011 | Comments Off
Federal Reserve leaves Rates and POMO unchanged as volume jumps across the board
The Federal Reserve Bank leaves rates unchanged as stocks close just off the highs of the session with volume up across the board. Traders pushed stocks higher after New Home Sales figures were released showing a near 18% jump month over month sales. After setting the highs of the day stocks settle back just above the mid-point of the session awaiting the Federal Reserve statement on policy. Ben Bernanke and company did not change much of the language from the prior meeting. Stocks reacted a bit, but not as violently as recent “Federal Reserve” policy days. Stocks closed off the session highs, but overall good price action.
Tomorrow we’ll get data from the AAII sentiment survey showing where the bulls and bears stand in this market. So far the high level of bullishness has yet to deter this market from correcting more than just a few percentage points. Distribution has yet to really pile up high, but the NASDAQ does sport 3 days worth. Given the recent action in the market we’ll need to see prices eclipse last week’s high to avoid churn in this market. At this point, it does not appear to be churn and I am simply highlighting what can derail this rebound. Always know what can run you over, be prepared.
Performance Numbers, from the View of a Subscriber
January 25, 2011 | Comments Off
bjesse a Big Wave Trading subscriber did an independent study of Josh Hayes’ trading performance. bjesse did not receive compensation for this review, but it highlights cutting your losses and riding your winners. Did you have this type of success? If you haven’t, why haven’t you subscribed to Big Wave Trading yet?
Looking at the performance of Josh Hayes’ trades in a scatterplot, it is clear that losses are kept small relative to gains. But exactly how are they distributed? Here I examine Josh’s trades from 1/1/2010 through 1/19/2011. There are a total of 697 trades. 61% are gains. The average gain is 33% and the average loss -6%.
The histogram shows a decidedly skewed distribution with a fat positive tail. It is non-normal; not a Bell curve. This is most dramatically seen in the log plot. This gives Josh his edge. Negative returns are confined to 4 bins; positive returns extend for more than 15 bins (nearly 5 are below the mean and over 14 above). 84% of losses are less than -10%. Nearly half of all gains are over 20%; one fifth are over 50%, and 7% are more than 100%.
End of Day Rally Erases Losses as Volume Jumps
January 25, 2011 | Comments Off
The markets rally off the days low to close just off the highs of the day as volume races higher. The day did not start off out too well with the market moving lower. However, a better than expected jump in consumer confidence boosted the market pushing stocks to their highs of the day. From eleven o’clock on the market bounced between the highs and lows of the day until the final hour of trading. At the close stocks were able to close just above yesterday’s close with volume running hot. For the second day in a row the market has been able to find buyers, but lagging stocks are the ones supporting the market.
The obvious positive for the market is its resilancy to fend off sellers and avoid a nasty roll-over. The downside is laggard stocks like CSCO are helping the market out. AAPL did do its part today continuing its rebound from last week’s sell-off. It has retraced more than half of last week’s move, but volume has been slightly disappointing. CSCO on the other hand is trying to rebound from its atrocious showing after its last quarterly earnings report. It is due out in with earnings on the 9th of February.
The Market Rebounds from Last Week’s Selling
January 24, 2011 | Comments Off
Volume ends lower across the board with solid price gains
Stocks advance in front of President Obama’s State of the Union Speech. Preliminary volume shows stocks advanced in lighter trade compared to Friday’s inflated figure due to options expiration. Price gains were mostly had by big cap technology stocks with AAPL leading the way. Early session selling gave way to buyers pushing the market back to Friday’s high by early afernoon. The NASDAQ was the clear winner on the day with the Dow Jones Industrial average not too far behind. Small caps lagged, but it was the S&P 500 limping far behind all the averages into the close. A good rebound from last week’s selling, but do we have the buyers to build upon today’s action the market will try to answer this week.
The NASDAQ was able to recapture its 20dma, but failed to retake its 10dma. Today’s buying spree wasn’t as powerful as we’d like to see, but it did take the sting out of last week’s selling. However, plenty of stocks continue to show plenty of damage from the selling beginning on Wednesday. A few leaders rebounded, but the majority of leaders were in tepid volume and not showing the type of conviction for a solid rebound. The moral of the story is stick to the price and volume performance of the individual stock you hold.
Afternoon Buyers Find Delight, but Leading Stocks Take a Hit
January 21, 2011 | Comments Off
The NASDAQ suffers back to back distribution days leaving the current rally under some heat
Markets whipsaw investors as fears over a market top set in, but afternoon trading saves the session. After Wednesday’s atrocious action sellers were quick to jump out of stocks all morning long. Volatility shot through the roof as investors were looking to run for the hills fearing a top may be in the market. Volume soared along with volatility, but by 2 pm the selling began to give way to buyers. Options expiry week is always filled with quick whipsaw moves and this week has been no exception to the rule. By the end of the day the NASDAQ was able to find support at its 20 day moving average and close above its mid-point of the session. Unfortunately, leading stocks did not fare as well as the rest of the market.
The S&P 500 and Dow Jones Industrial Average have been holding up relatively well. Considering the Russell 2000 index was down well over 1% again today the large cap indexes are showing a bit of outperformance. One problem, when the leading indexes such as the NASDAQ and Russell 2000 suffer serious blows and diverge from the S&P 500 and Dow there are very dark storm clouds approaching.
The Market Adds to Gains as Financial Stocks Rise
January 19, 2011 | Comments Off
Uptrend continues
The trend continues as stocks close out the day near the highs of the day as volume ended mixed. Price action continues to be bullish despite calls from many who believe the market is overbought. Financial stocks were big winners today as a positive Portugal bond auction was observed. However, the trend is established in the financial stocks. NYSE volume rose on the day, but the NASDAQ slipped under yesterday’s level. While not ideal, volume continues to be positive for the market overall. Our trend continues and fighting it will only leave your account in ruin.
In “Money Never Sleeps” Gordon Gekko states “ride the trend, but do not try too hard for the turns” (not an exact quote, but it’s the gist). So many often get caught up in trying to “pick the top” or the “bottom” they lose sight of the overall trend. During the Bull market from 2003 through 2007 the market would correct itself 15-20% over a period of time. But, the danger is trying to jump on the turn too quickly or worse yet anticipate it. There will be signs of a pending correction with leading stocks stumbling and the NASDAQ flashing distribution and stalling action prior to the actual turn itself. Until then, continue to ride the trend.
NASDAQ Suffers Heavy Distribution
January 19, 2011 | Comments Off
AAPL Reverses Gains as Stocks Close Just Off Their Lows
Sellers took to the market as the NASDAQ suffers a major day of distribution. The carnage continued after hours with FFIV reporting mixed results sending the stock lower by more than 30 points in after-hours trading. The open belonged to AAPL as the stock hit all-time highs prior to the market open, but sellers were able to reverse its fortunes to bruise the response to AAPL’s blow out earnings report. The Dow Jones Industrial Average was able to hold up, but IBM helped its cause. Small caps were the biggest losers as the Russell 2000 droped 2.6% on the day. Clearly stocks were sold today; one day doesn’t make a trend, but can leave a sizeable black eye.
Marker leadership certainly took a big hit today as many were hit badly. A few market leaders like CMG and LVS have failed to make a big push after punching back through their 50 day moving average. Typically, you we would see these stocks continue to run after punching through. It would be prudent to take profits off the table and cutting laggards. This market run from March 2009 is very long in the tooth and a larger correction is not out of the realm of possibilities if you take a look at history.
The Market Adds to Gains as Financial Stocks Rise
January 13, 2011 | Comments Off
Uptrend continues
The trend continues as stocks close out the day near the highs of the day as volume ended mixed. Price action continues to be bullish despite calls from many who believe the market is overbought. Financial stocks were big winners today as a positive Portugal bond auction was observed. However, the trend is established in the financial stocks. NYSE volume rose on the day, but the NASDAQ slipped under yesterday’s level. While not ideal, volume continues to be positive for the market overall. Our trend continues and fighting it will only leave your account in ruin.
