Financials Play Catch-up as Volume Jumps
June 30, 2011 | Comments Off
Greece past austerity measures sending thousands to the streets protesting giving sellers a reason to push down technology stocks. Volume began to creep higher as the morning wore on, but financial stocks began to pick up steam keeping the S&P 500 a float. Not giving up, the NASDAQ was able to turn around and move into positive territory. The roller coaster ride was not over as a late afternoon dip followed by a recovery fooling many traders. Volume was higher on the day, but many leaders aren’t showing the massive acculation we would normally see. The NASDAQ remains underneath its 50 day moving average. Today was a day of accumulation despite questionable underneath.
The NASDAQ still remains under its 50 day moving average. A key level many traders, including us like to see the index remain above it. We will need to see the NASDAQ power through its 50 day with big volume to prove this uptrend’s worth. However, any sign of reversal at the moving average will unfortunately signal the end to this move. We aren’t going to anticipate either situation, but we will be prepared to react as the market warrants.
Stocks Rise After Friday’s Mis-Step
June 28, 2011 | Comments Off
Monday got off to a rocky start as stocks dipped below Friday’s low. A weak consumption figure did not help stocks get off to the right foot, but buyers were able to step in and kick up some buying. Volume was well off Friday’s bloated level after the Russell rebalance took effect. Comparing volume to Thursday’s session Monday’s volume was well below Thursday’s level. Not the type volume you would associate with accumulation in the market. Fortunately there were some leaders showing strength, but without the power of the market behind them they are likely to faulter. We may still have a bounce back up into the 50 day moving averages, but it is unprobable this move turns into a new bull run.
Short commentary tonight. This market is going to churn up people’s portfolios. Try and keep your sanity by staying prudent. Cut your losses short.
Bernanke Fails to Deliver Stocks Fall
June 23, 2011 | Comments Off
Stocks fail to add to Tuesday gains as Bernanke fails to deliver inspiration to bulls. Bernanke did not hint at another round of Quantitative Easing and market participants did not take well to the news. Throughout the day the market held near the highs of the day with a few leaders tacking onto their gains. Unfortunately, after 2:30 pm EST the market had concluded Bernanke was not going to announce another round of QE as next week will see the end of QE2. Falling to the lows of the day the market gave back a good chunk of Tuesday’s gains. Not quite the action we would want to see after a good day in the market. The market still remains questionable, tread carefully.
Many of us were able to grab a few longs in the market yesterday, but one thing we did not do is plunge. We understand our odds and the odds were we would see a bounce, but it would have a high probability of failure. It is important to understand where the market is at and more importantly how leaders are acting. Right now the leaders are coming from the Medical industry telling us we are in the VERY LATE STAGE of this bull market. Not to mention, as I have noted many times we are in a seasonally difficult time in the market. Mix it all together and you get one tough market!
Crude Falls Hard as NASDAQ Shines
June 23, 2011 | Comments Off
Disappointing economic data kicked off the morning session with heavy volume selling. The real story to kick off the day was the IEA releasing crude oil from strategic reserves. Crude fell immediately and at one point sported a $89 handle. Crude was able to find a bit of support, but the losses were quite damaging. Stocks on the other hand enjoyed a whipsaw day. Early on the market appeared as if it was about to collapse on itself only to be saved by institutions stepping up and support the major indexes at their 200 day moving average. Volume soared on the day ending 30% higher across the NYSE and NASDAQ showing institutions were willing to get in and be net buyers. By the end of the day the NASDAQ shined with Small Caps not that far behind.
Today was one heck of a day as fear gripped the early morning session with the VIX jumping above the 20 level. But, the 200 day moving average acting a perfect support level for buyers to scoup up shares. There were plenty of stocks we are watching and holding finding support intraday and not too mention a few names breaking out. While this market in the long trend appears to be very shaky, we still have a strong likelihood of a rally heading into the second quarter earnings season. Not too mention the terrible performance of June it would not be surprising to see month end fluffing to improve numbers.
Oversold Conditions are No More; Stocks Confirm a New Market Rally
June 21, 2011 | Comments Off
From the get-go buyers were out in full force scooping up shares. The S&P 500 and NASDAQ had big price gains and volume coming in to confirm a new market rally. There was much to cheer about this one day wonder, but do not get overly giddy. Remember, June first saw the May 31st follow-through day go up in flames. However, we are also coming off some serious selling over the past month and a half, a rally here is not a surprise to us. We are going to operate on the long side with today’s confirmed rally, but know this will not last very long.
There is one instance where a June follow-through day actually worked. While we do expect a bounce here back up into the 50 day moving average a rip roaring new bull market we are not. Sentiment the past two weeks have been uber-bearish. The crowd got awfully bearish in a hurry, a sign we are short-term oversold. Last week the spike in the VIX, although not severe was a sign of selling exhaustion. If there was a bit more capitulation I would be more inclined to think this market has a better probability of moving higher. Unfortunately, we do not have the proper conditions for a new bull market rally. With that said, a few long opportunities have taken place and we are going to take advantage.
The talking heads on CNBC are talking about the potential parliament vote in Greece to spur a market rally. Perhaps it will or it could be the conclusion of the FOMC meeting tomorrow that will provide clarity on a possible Federal Reserve move in the coming weeks. QE 2 is set to end next week and the market is trying to figure out what do from here. Will second quarter earnings be enough to propel the market higher? For now, we have a confirmed rally and we are going to get long. We are, however, will be quick to take profits and not leave our positions with a lot of “slack.” As usual, we will be quick to cut losses to protect our back side.
Volume Falls Flat as Stocks Rise
June 20, 2011 | Comments Off
This is a big week as the FOMC Rate Decision will be released on Wednesday at 12:30pm EST. The lack of volume today is an indication big institutional funds are going to wait until the Federal Reserve Chairman Ben Bernanke speaks on Wednesday. Today would have been a bit more meaningful if there had been volume, but price action was decent. There were a few leaders getting support today with mixed volume, but not bad after the carnage over the last few weeks. We are still far from a new rally especially with the NASDAQ below its 200 day moving average.
If you do a post-analysis on your trades and plot them on a graph you will notice when the NASDAQ is below its 50 day moving average, let alone its 200 day you will find you lose when the NASDAQ is below its 50 day. Weakness begets weakness and you need to be aware of where the market is at all times. The goal is to have capital working when the odds are with you, not against. The gambler mentality will try to get you to “catch a bottom,” but the true professionals will only put capital to work when it is confirmed. Keep in mind not all confirmed rallies will lead to a new bull market. Perhaps we do run back up to the 50 day moving average, but without a confirmed market and new leaders we’ll likely fail.
Much has been made of the oversold conditions in the market. Sure, markets are oversold, but how can they not be? We are more interested in longer term trends then one to three day rallies. The bigger trend in place is a downtrend and it will take a bit of work to bring on a new bull run. New bull runs are not always easy to point out if you are not looking for the right signs. There is plenty of history to show when a new market is likely to work and when it is not. For now, from a seasonality stand point we do not stand much of a chance to get a rip roaring new bull market run. However, we could see a short run back up into the 50 day moving average across the board. Remember, if you are going to go long remember to cut your losses short and take profits just as quick.
Weakness Continues as Fear Finally Appears in the Market
June 15, 2011 | Comments Off
Yesterday’s action turned out to be a one day wonder as the market gave back all of yesterday’s gains and then some. Crude oil was a big loser dropping more than four dollars, fueled by weak economic data and issues in Greece sellers were out in full force. The downtrend continues as prices weren’t able to turn around as selling just continued to put pressure on stocks. Volume soared across the board as institutions were back out selling stock. Fear did creep back into the market as the VIX jumped almost 17%, but it remains well below levels seen in March. Until the VIX really jumps, above March’s level a significant low still is a ways away. Another weak day and it goes to show cash is king and waiting patiently for a proper setup is ideal.
The stock market is real weak. The NASDAQ is now below its 200 day moving average. A terrible signal for the entire market and we do not see any signs of conditions improving. We’ll need to get climatic selling in the market to market any sort of significant bottom. Oversold conditions remain and again, like yesterday bounces will occur, but we aren’t going to get giddy unless we have climatic selling. In addition, we’ll need to see a new crop of leaders form and begin to hammer out primary base formations. Stay patient and stay away from trying to become a hero.
Bouncing from Oversold Conditions Stocks End Higher
June 14, 2011 | Comments Off
It was about time as stocks closed higher after heavy selling plagued the market last week. Today was not a surprise as the market was in extreme oversold conditions where an obvious bounce was near. Advanced retail sales helped boost buyers as sales did not drop as much as expected. Although still falling, retail sales did not drop -.5% as expected. This coupled with another hike in capital requirements in China helped boost stocks. Stocks moved higher throughout the day, but one large negative hit the market. The run rate of volume fell throughout the day as stocks rose giving the hint big institutional investors were on the sidelines not involved in the buying. Volume is a key ingredient in our assessment of the market and today showed we got nothing more than an oversold bounce. At the end of the day stocks fell off their highs of the session leaving one more blemish on the day’s action.
The 200 day moving average has provided a support area for the NASDAQ here. It would have been better if volume surged here to show big institutions were stepping up supporting the market. We simply do not have this support, perhaps tomorrow we’ll see institutions step back in, but we can only examine what the market has given us. Speculating on what MAY happen is simply dangerous to your stock market trading. If we had a robust rally with volume surging I would be singing a different tune. Until such a time where we get our ducks in a row we’ll be looking for better short setups.
Stocks End Mix as Commodities Move Lower
June 13, 2011 | Comments Off
Volume dried up after Friday’s disastrous close, but the market was unable to hold its early morning gains. The market did not get a dose of economic data to sway the market in either direction. Pundits appeared to be more worried about what Greece’s potential, inevitable default would mean for the market. Bill Gross even weighed in telling the market the United States was worse off than Greece. Stocks did sell off during the midday but were able to bounce back, but another lackluster close did not offer any hope for a potential upcoming rally. Volume ran much lower throughout the day, it did pick up when selling began to accelerate, but failed to continue to accelerate when the market came off its lows. Just another sign the market is unhealthy, but on the bright side the S&P 500 did begin day one of an attempted rally.
There is potential for a rally to occur, the market has closed lower for 6 straight weeks and is well into oversold territory. It would not come as a surprise to us we wake up one morning with a big short-squeeze. However, we do expect any rally will ultimately fail and not turn into a new bull run like we saw on September 1st 2010. Seasonality wise, we are entering into the summer months where it can get quite tough for stocks. It is possible we do see the market have a rally lasting from 2-4 weeks and we’ll certainly get on board, but we aren’t looking for any sustain rally. A sustained rally will need to have the market correction significantly over a period last longer than 3 months. Do not believe this bottom we put in today is the absolute bottom.
Stocks Close Weak, but end Higher
June 9, 2011 | Comments Off
The market was able to stop the bleeding temporarily by closing higher, but volume lagged. Institutions weren’t out in the market in full force scooping shares as volume sagged significantly behind yesterday’s level. Beginning the day the market was able to shake off another disappointing jobless claims figure. However, a better than expected trade balance was able to put a positive spin on things. Let’s not forget the NASDAQ had been down for four days in a row, a small rally is not surprising. Given the recent decline the market had to relieve the selling pressure. We remain in a weak market and given the close it is an indication the market will remain weak.
Perhaps another reason for a bounce was the overwhelming bearish sentiment amongst AAII survey respondents. Bulls came in at 24.42% the lowest since before the September 1st rally. Bears jumped to 47.67% week over week. Since the NASDAQ topped on the second of May sentiment has increasingly gone to the bearish, but this week it jumped considerably. Perhaps we see a short-term bounce to clear out these bears, but we don’t have what we had with the September 1st rally. Leaders continue to look terrible and there are very few stocks near buy points. If we are able to gain some traction and get a follow-through day we might be able to score some short-term gains. However, I am not banking on this situation.
