Ben Bernanke Delivers as the NASDAQ Reclaims 2007 Highs
April 27, 2011 | Comments Off
The early going was very rocky as sellers took to the market taking down equity prices prior to the 12:30pm EST policy statement and 2:15pm EST press conference. By 11:00am EST stocks hit the lows of the day and began to trend higher. Leadership took a hit prior to the statement as investors were timid after NFLX earnings hinting the market was going to sell-off. However, stocks began to push higher after the release of the statement and again at the end of the news conference. Growth stocks, leadership type stocks were able to turn around and end on a solid note. Today’s market action reaffirms the market rally and higher prices are on their way.
Earnings season has been a good one. We are seeing earnings continuing to beat expectations. Now we are seeing a few hiccups with NFLX and CMG, but these two stocks are still holding key moving averages. NFLX fundamental story is still there, they are the leader in their space. However, we need price and volume to confirm their story. These two stocks have their “story” intact, but if they roll over on volume it will spark a bigger downside. Given the recent action, it appears they’ll make another run at higher prices. Let price and volume confirm your view.
NFLX Stock Tumbles in After-Hours Trading
April 25, 2011 | Comments Off
Volume tumbled as stocks took a break after last week’s price run up. The market attempted to breakout and even notched a follow-through type day last week it is not out of the question we’d have a slight pullback. In addition, the market is certainly positioning itself ahead of the Federal Reserve meeting on Wednesday. The disappointment came in the after-hours session with NFLX stock posting earnings were less than stellar for the street. The stock has been down as much as 14 points in the after-hours session. Overall, a decent day in the market despite NFLX stock hiccup.
NFLX stock has been and at this moment continues to be one of the greats in the bull market off the 2009 lows. Citing rising costs to acquire new subscribers, nervous bulls are continuing to sell down the stock. At this point it is far too early to say the stock has ultimately topped. I wouldn’t count it out just yet, it still is the leader in video service. AMZN service can’t touch it and Facebook is late to the party. The stronghold in the space will at some point lead NFLX stock to mediocre status, for now you simply can’t count it out just yet.
AAPL Stock Blows out Earnings as Stocks Zoom Higher in Increased Trade
April 20, 2011 | Comments Off
Running out of the gate stocks zoomed higher as volume swelled after the market had pulled back from the reaction move off the Japan Crisis low. The action near the most recent highs called into question the whether or not the market would be able to support higher prices. IBD even put their market outlook as “uptrend under pressure.” A few leaders had held up, but it was the big stocks like AAPL and GOOG stock concerned many traders. Given the recent earnings report from AAPL stock it is clear this uptrend has legs. We will continue to pile into leaders here and ride the next wave higher.
There were plenty of positive earnings releases yesterday like VMW stock, but today we had stellar reports. AAPL stock was an obvious winner, but QCOM stock posted great earnings. Mobile smart phones continue to be a hot item for QCOM and its earnings report/subsequent action proves there is demand for the stock. Another superior earnings report was FFIV stock. It wasn’t so much its earnings, but its guidance was spectacular. Cloud computing continues to be a hot sector for technology revolutionizing the way enterprise handle data. The cloud is still in its early stages, just be aware of the leaders and use price as your guide.
Today’s move certainly relieved any oversold condition existed from the prior sell-off. Given the action in the market leaders any overbought condition that gets signal will probably only get worse. Meaning, overbought conditions will likely become MORE overbought. Pay little attention to these types of indicators and focus on the market leaders here.
The S&P 500 would have had a better day if it weren’t for Banks. Financial stocks did very little to keep up with the market as it was Banks closing down by 1.05%. Leading the way was Technology followed by Oil and Gas as crude oil finished up more than 3 dollars. The poor, who get squeezed by inflation continue to be hit by high oil prices, but the rise in oil prices have certainly helped out oil and gas names.
Stick with the leaders and leave the laggards for the birds.
Standard and Poors Knocks off Stocks Ending Negative, but Near Highs
April 19, 2011 | Comments Off
At 9am EST Monday morning Standard and Poors (S&P) shocked the market by putting the United States debt rating on negative watch. Futures dropped like a rock as fear gripped the market and selling would not stop there. At 10am EST the NAHB Housing Market Index came in lighter than expected and helped fuel sellers pushing stocks to their lows. Volume ran higher throughout the day as traders went for the exits. Just an hour later the market was able to find support and buyers stepped in. Buyers began to step up just after the 2pm hour, pushing the market to the highs of the day. A bullish reversal indeed, but today was a day of distribution and another warning flag added to this uptrend.
Apologies to Dick Cheney, but deficits DO MATTER. Today proves they do matter and it will be interesting to see if any other rating agencies move forward with downgrading US Debt. While we did not see an outright downgrade, but what we did see was S&P shining the light of potential disaster if the United States were to continue on the path we are on and the outcome will be disastrous. Look for the debate to continue.
Once again we find ourselves in oversold territory, but now we are firmly below the 50 day moving average. Despite some leaders holding historically going long stocks when the NASDAQ is below its 50dma tends not to be profitable. While not a perfect indicator, you will find when you make losing trades on the long side come from when the NASDAQ is unable to hold its 50 day moving average. The moral of the story, keep new longs small and cut your losses quickly.
Dip buyers will be out in full force telling you this is a buying opportunity, but we know better. The recent action has been LESS THAN IDEAL, but it certainly does not spell ultimate doom and gloom for the stock market. Stock market trading is filled with uncertainty, but we are after positive expectations. Setting yourself up for success begins and ends with finding situations giving you the edge. Without an edge you cannot outperform the market.
Remember, we have a holiday shortened week this week! Best of luck to this week’s trading.
Aloha
Fiscal Austerity and Budget Plans Dominate Stock Market Trading
April 19, 2011 | Comments Off
The market continues to act bearishly as gains from the morning session were unable to hold as buyers were unable to hold up prices. It was clear the market sell-off insuing after the market hit the high of day was due to the Obama budget plan. Prices dove as sellers quickly went out looking to dump stock on the market and proved to put in another bearish reversal. The NASDAQ was lucky enough to bounce and end near the day’s open, but over on the NYSE stocks weren’t as lucky. Financials weighed heavily on the market while technology tried to boost the market. In the end, the stock market finished off the session highs on suspect trading and we continue to seak caution.
On a positive note there were a few stock market leaders providing a silver lining to the day’s action. However, we’ll need the market to cooperate if we are to see these leaders push higher. Without the market, selling pressure will eventually take down stocks acting well. It is a matter of time, not if it will happen. Any bearish roll over in the market in the next few days with volume will certainly be a big red flag no matter what leading stocks are doing. A big tell will be if these leaders begin to roll over and sell off prior to the market catching wind of their action.
Crude Oil Cracks for the Second Day as Stocks Follow Suit
April 19, 2011 | Comments Off
Selling pressure continued on the NASDAQ for the fourth straight day. Institutions were busy in the NYSE selling down commodity related names including crude oil related names. Oil and gas names suffered the worse fate falling more than 2.9% followed by technology stocks on the NYSE. Financials were another area of weakness, but it was oil and gas names weighing down the market. The lackluster market action over the past week and the lack of ability for this market to push higher at the days end highlights the entire weakness of this rally. We’ll need to see this market turn around and show some accumulation.
There are a few big names holding up, but will it be enough. We can sit here and debate the merits of the economy and where it should be going, but it really is a fruitless adventure. It certainly appears the market is looking for the Federal Reserve to bail it out with round 3 of quantitative easing. Perhaps we’ll get it, perhaps we won’t, but the market is on shaky ground here. The prudent trader will certainly have an eye on the exit, cutting your losses short.
Stocks Slump Again Led by AAPL Stock and Small Cap Stocks
April 19, 2011 | Comments Off
Another gap and trap day where stocks weren’t able to hold the gains seen at the opening of the day. Gap and traps aren’t bullish movements, but bearish ones and today’s move came with increased volume on the NASDAQ as volume slide on the NYSE. A few mergers in the morning helped boost the mood of traders, but sellers were able to wrestle control away from the bulls. Continued bearish action on the NASDAQ with AAPL stock leading the way certainly has put a dark cloud over the market.
Since the middle of February we have been under institutional selling. After the lows seen after the Japan crisis the market did confirm a new uptrend with leading stocks breaking out. A few have held, but overall the reaction is simply not OVERWHELMING bullish. TZOO stock has had a climatic run and did put in a nasty intraday reversal. TDSC stock also succumbed to heavy selling today gaining support at its 20 day moving average. It is a blemish on the stock, but far from being bullish. The biggest of them all being AAPL stock has been experiencing heavy volume selling. A true sign of institutions dumping the stock is when you see big RED BARS in the chart. So far, not the ideal state for the market here and with options expiry Friday volatility will reign supreme.
Sentiment numbers will be interesting this week to see if the bulls were able to back off from their lofty levels. It is true the AAII investor is not as bullish as it once was prior to the Japan crisis, but it is now back above 40. The II survey continues to show readings of UBER BULLISHNESS. In addition to sentiment, breadth is waning. The McClellan Summation indext continues to notch lower highs and lower lows a sign these rallies are becoming less and less powerful.
US Dollar Index Breaks to New Low; Stocks Fall in Light Trade
April 19, 2011 | Comments Off
Once again the market gapped to the upside only to see prices head lower. Volume ran lower throughout the day; it never got going despite the acceleration in selling at the 2pm hour. Today’s action was a culmanation of the entire week. While on the surface it apears the market is consolidating gains we do have a few stall days and the action has been quite loose. It was nice to see the market have the ability to get off the lows and avoid finishing down there.
The story of the day is the US Dollar index finishing at the lows of the session. Despite the looming government shut down, the continued printing of the US Dollar has brought the trade weighted index at multiple year lows. The unknown consequences (heavy sarcasm) of inflation and potential hyper-inflation will continue to punish the dollar index.
Another red flag is the ultra-bullish nature of the entire market. Investors Intelligence survey hit a multi-year high of 57.3% while bears are just 15.7%. AAII Bulls stand at 43.59% and Bears at 28.85, but AAII bulls hit a high just before the Japanese crisis. Remember, sentiment is not a perfect indicator and should not be traded on, but the ultra-bullish nature should have you cautious.
Positive Close for the Stock Market as AAPL Stock Slips Again
April 19, 2011 | Comments Off
The day got off to a great start as the NASDAQ was able to move higher. However, sellers worked themselves into the market knocking off market leaders just at the eleven o’clock hour. It appeared as if the market was about to put in a nasty outside reversal day, but Tuesday’s low held avoiding a potentially very NEGATIVE situation. Volume rose across the board and ran higher throughout the day giving the impression institutions were stepping up their operations in the market. Today gave the impression of stalling action despite ending near the mid-point of the day. Given the action amongst some leading stocks and the overall market action a bit of caution is warnted to here.
Today was not your prototypical “stall day,” but given the inability for the NASDAQ to remain above 2800 it certainly was. Last Friday we saw the market put in a stall day making two in total. While this is nothing to worry about YET we’ll have to become more defensive if we begin to see a few days of distriubtion and/or more stalling. Another clue will be whether or not the current crop of leading stocks holds up and if breakouts begin to fail. Pay close attention!
AAPL Stock Leads Tech Lower ast the Market Takes a Break in Light Trade
April 19, 2011 | Comments Off
Sellers took to AAPL stock once again as the stock fell more than one percent weighing on the NASDAQ and the rest of the technology sector. Leading stocks on the other hand acted very well suggesting the market simply was digesting gains before making a move to the upside. The stock market has come well off the lows following the crisis in Japan and it is time for the market to take a breather. Today’s sideways action and support show the underlying strength and healthy action. Despite your opinion of where this market should be going all signs are pointing to more highs are ahead.
In the short-term are we overbought, yes, but that does not in absolute terms confirm we have to pullback or continue to stay sideways. Healthy action would include a few two to three day minor pullbacks, but this market is anything but normal. Follow the trend and let the action dictate your moves.
