Stocks Give Away Intraday Gains Close Near Lows
July 29, 2011 | Comments Off
The day started off rocky despite a positive jobless claim figure at 8:30pm. Traders pushed the market to its high of the day by midday causing many to think the recent sell off was all over. However, the market continues to be heavy with plenty of stocks continuing to break down killing any possibility of a sustainable rally. Today is a perfect example of trying to catch a “bottom” and only catch disappointment. Washington continues to be a mess, but there is something bigger happening in the market. We are in a correction and it is best to stay on the sidelines until market conditions improve.
It is really obvious we are breaking down and it may be a bit obvious to short here, but it is clear we have plenty of stocks breaking down. Rallies will more than likely be sold into. A debt ceiling compromise may bring on a rally, it would be an opportunity to look for weak stocks.
Stocks End On a Sour Note Notch Another Day of Distribution
July 27, 2011 | Comments Off
Once again the Debt Ceiling debate continued to dominate the headlines despite earnings season. The lack of ability for Washington DC to come together continues to strike fear amongst market participants. Institutions stepped up their game today selling stock on the New York Stock Exchange, but the NASDAQ thanks to the Big Cap Technology stocks was able to avoid heavy volume selling. Small caps were not so lucky leading the market lower. For the second straight day late day selling erased any positive headway the market had made intraday. The lack of clarity from Washington DC has put a stalemate on the direction this market wants to take. At this point, distribution has piled up and many leaders are coming under fire.
BIDU stock reported excellent earnings vaulting the stock more than 5% on the day. However, another leader UA stock did not fare well. NFLX stock was another loser, but the stock was able to find support at the end of the day finishing above its 50 day moving average. There is not a clear picture being shown from the leaders. Earnings season always produces fireworks, but with the major averages looking shaky it is hard to be confident with the long side.
Institutional Investors Unload Stock; Finish Near Session Lows as Volume Soars
July 27, 2011 | Comments Off
Another ugly day, or as we like to say “fugly” day on Wall Street as investors sold down stock. Small cap stocks lead the way down as the Russell 2000 closed down nearly 3%. The NASDAQ shed 2.65% while the S&P 500 closed below its 50 day moving average shed 2%. Volume leapt across the board well above average volume showing institutions were busy dumping stock on the market. Despite a few bright spots the market has come under HUGE fire as of late and leading stocks were telling the story.
Fear was back in vogue as the VIX jumped 10% fueled by fear over the ramifications of a debt deal. At this point, the two sides continue to remain FAR apart from a deal, but a deal is likely to come. One or both sides will flinch in the final hour, but the underpinnings of this market continue to appear weak. Very few stocks are holding up during this market sell off and continue to suffer major selling. While I’d love to believe we can continue higher after a debt deal is in place the leading stocks are simply NOT suggesting this possibility.
Adding fuel to the fire is the inability for the Russell 2000 and S&P 500 to hold onto their 50 day moving averages. Earlier in this month we did see the averages find support at this important moving average, but now we find ourselves with zero. It would take nothing short of a miracle to turn this might ship around and move into a new bull market.
Hope Fades on Debt Deal Stocks Finish Lower
July 25, 2011 | Comments Off
With little economic news to digest the market turned its sight on the Debt Ceiling debate in Washington, DC. Volume began the day lower on the NASDAQ and flirted with positive territory on the NYSE. By the end of the day however, the NYSE posted higher volume than Friday giving the S&P 500 and the NYSE composite a day of distribution. With six days of distribution the S&P 500 is indicating the market is very top heavy. While the end of the day was not so hot, mid day it appeared stocks were going to roar higher and forget about the debt ceiling worry. Sellers had a different idea as instiutions showed their true colors by selling NYSE stocks. The picture looks bleak for the market at this juncture and it will take a major turnaround to regain some luster.
NFLX stock reported earnings after the bell (time of writing) and the stock is taking a hit. Traders are taking the stock down in reaction to its earnings report. At this time the stock is trading below its important 50 day moving average suggesting a run here is all but over. The company guieded forecasts lower despite the change in its pricing model. Subscriber growth was less than stellar, but more importantly it will be how the stock reacts to the news in the days to come. Can it rebound? Or will heavy selling finally take this bull market winner down? It has had quite a run, but let the price and volume action dictate how you push forward.
Something Doesn’t Feel Right but Stocks Close Higher on Increased Trade
July 21, 2011 | Comments Off
Financial stocks lead the market higher despite the pitiful performance from many leading stocks. Jobless claims jumped week over week, but it was better than expected readings from Leading Indicators and the Philly Fed helping out the market during the early going. Leading stocks bolted out of the gate in the morning trading hours only to see their gains evaporate and notch losses. Volume was much higher than Wednesday’s level giving the S&P 500 a big accumulation day. Not so much for the NASDAQ finishing off its highs was more of a blemish than a feather in its cap. Despite the gains, underneath the market continues to look weak with many market leaders coming under distribution.
Stock market trading is not an easy game. It requires you to be disciplined and keep proper risk controls in place. We like to employ a cut loss strategy to keep our risk profile low. Pushing small losses into bigger ones is not the game we like to play. Stick to a disciplined approach, cut your losses!
Stocks Close Lower Despite Big Earnings out of AAPL Stock
July 20, 2011 | Comments Off
AAPL stock blew out earnings estimates and gave an impressive earnings release. There is no denying the power of that stock, but its gains failed to lift the market for a second straight day. Volume dried up across the board, excluding AAPL from the mix. The action in many stocks have become troubling and today we saw some nasty reversals like VMW leading us to believe this rally is being sold into and not bought. AAPL too reversed from its gap this morning giving pause to could the stock actually have topped? (Hate comments are to be expected) While the indexes still remain somewhat ok, the action in leaders is not inspiring.
We have been talking about the right side of the most recent bases and how volume has really been anemic. Wedging as we like to refer to a rising stock price on lower volume and it simply means demand for the stock is waning. We have seen in the past this situation, but it has become increasingly NOTICEABLE. Earnings are one thing, but we sell on the technicals. Fundamentals are used in the buying decision and not the sell decision. Remember in November of 2007 when those fundamentals looked so darn good? Selling on technicals left you with plenty of cash on hand to use in 2009 and not to mention a huge leg up on the market.
AAPL Stock Shines as IBM Stock Reports Earnings After-Hours
July 18, 2011 | Comments Off
AAPL stock surges on big volume as buyers rushed into the stock. In the meantime, the NASDAQ and the rest of the stock market were in trouble for much of the day as sellers took ahold of the market for much of the day. The late day surge in AAPL stock helped lift the NASDAQ from its lows and avoid closing below its 50 day moving average. Small caps took the biggest hit of the day closing down more than 1.5%. Volume did come in lower on the day, but remember Friday was option expiry inflating Friday’s volue levels. A fair comparison? We still remain in a shaky environment here and we’ll need to see come positive action here as the market flirts with key moving averages.
A bit of positive economic news came from home builders as the NAHB Housing Market Index was released at 15, better than expected. The bad news of course is over supply as more than 2 million homes remain unoccupied. Until supply can be met by demand Case-Shiller sees a drop of 20-25% in home prices are likely. A bet on the homebuilding sector is a dead bet for now and until supply is met by demand. Look for this trend to continue.
Bernanke’s Hint at QE3 Fails to Keep Stocks at Intra-Day Highs
July 13, 2011 | Comments Off
Ben Bernanke got the market off on the right foot after the 10am EST hour. Stocks were giving up early morning gains prior to Bernanke’s testimony in the House. The market cheered as the possibility of further easing, or what it is in reality printing money was put back on the table. Stocks stormed higher printing new highs until the 11:30 am hour. A few stocks resumed their up-trends, but the key factor in all of the day’s movement was volume. Both NYSE and NASDAQ saw volume trail behind Tuesday’s level a sign institutions weren’t rushing in to accumulate stock. By the time the afternoon came around the market began to sell off. Selling accelerated during the 3pm hour and a late day blip was able to save the market from closing at its lows. Today was not the type of action you want to see from the market and continues to warrant caution when approaching this market.
Gold and silver were the talk of the town as gold hit a record high today. Silver enjoyed a nice rally as traders are flocking to the precious metals as a hedge against a loss of confidence in the fiat currency. In addition, it is a hedge against the inability of governments to reign in spending and produce surpluses from budgets. Unfortunately, we have yet to demonstrate the ability to produce surpluses consistently. Fear continues to spread throughout the markets, but fortunately for us we have the market providing us with vital clues where we are about to head.
Thursday’s Premium Subscriber Analysis
July 12, 2011 | Comments Off
While MarketSpeculator completes his vacation I felt that I would post this for everyone so that you can see what I said to subscribers after Thursday’s stock market session:
It’s groundhog’s day! Anybody remember that Bill Murray movie? It appears that is the twilight zone world we are in right now in the stock market. Just like going heavily short after six weeks down is not the smartest trade in the world, going all-in after today being the 8th straight up day for the Nasdaq with every day coming with below average volume is not the most rational thing to do. I know, after seeing a day like this, it is hard to not get involved with all the euphoria of the gains you are missing and go all-in. However, I will let you know that is the trade of a complete emotionally insecure amateur. The smart traders have been buying stocks according to their charts and if they are not fully invested by now there is a reason for that. The reasons: up 8 days after 6 down weeks, no volume on the rally, leading stocks are breaking out from V-shaped, late-stage patterns on low volume, cheap stocks are the only stocks moving up besides retail, medical, gaming, and auto. How is it possible for a disciplined trader to ignore all of that and buy stocks? The answer is it shouldn’t be. No rational trader would see the tape here and say “yeah I want to buy stocks all-in today.” The smart trader says, “wow, what a retarded tape. It needs to calm down and be more orderly before I just jump in like a wild boar.” Greed will get you nowhere in the stock market. I am not upset about being only 40-45% invested in stocks here with 35-40% of them in the medical field. In fact, I am glad I am. If I was fully invested here I would have broken my rules that have worked for the 14 of the 16 years I have been playing this game. The truth is that no fear ever entered this market, the rally appears to be a completely oversold bounce, leading stocks are ugly, cheap stocks are in vogue, and defensive sectors continue to lead overall. A pullback here on even lower volume followed by a rally on higher volume should set up better charts if this thing is going to hold. Without sound charts, I refuse to buy this tape. I continue to believe we are in our last stages of this bull run. I absolutely did not think we would hit new highs. That was a thought I really didn’t see happening after all the distribution in the tape. However, after hitting those highs on lower volume and watching the final hour of action today it is hard not to laugh and think that this could be the best setup possible for the market to really swoon. Something still feels like 2000 to me about this tape (not as severe but the overall setup). If we continue to rally through the summer on low volume it is going to suck in a lot of amateurs and that will open the door for a possible selloff post-summer. Right now, all I can do is speculate and thankfully I never marry my speculative opinion. I marry charts. If they work, we live happily ever after until the relationship gets rocky and then we separate. If they don’t work, then I cut my losses and get a divorce immediately. Thankfully, with stocks as in life, I find marriage to be a joke. I’ll stick with a hot stock until it starts to get out of shape and then bye bye. No emotions. That is the only way to play this game. You can’t care about it. You have to beat it. By beating it that is the only way to make money. You want to make money right now, it is clear the medical area is the place to be. If I had not sold VRUS I would be doing even better. If I had not sold COO which was 25% of my IRA and 15% of my regular account I would be doing even better. It happens. But clearly medical stocks are the Kate Upton of now. I will be back later with charts and individual stock analysis.
Financials and Semis Drag Down Stocks in Increased Trade
July 12, 2011 | Comments Off
More fears over in Europe crept into the market during the early morning going. The market was able to tread water throughout the day, but volume was moving to the upside and with authority. Institutional players stepped up a bit today and showed their true hand, net sellers. While the FOMC meeting minutes provided 20 or so minutes of buying it did not last long. Sellers were in control the remainder of the afternoon closing stocks down near session lows. Institutions provided the volume jumped double digits across the board. For the second straight day the NASDAQ and S&P 500 notched distribution days a signal of caution for the market.
The two biggest losers on the day were financial stocks and semiconductors. BAC stock notched a new 52 week low a signal of weakness, real weakness. Financial stocks continue to be weak and point to further price destruction. It is unfortunate, but the reality. Semiconductors on the other hand did find support over the recent rally. However, the SMH ETF plunged below its 200 day moving average with nearly twice its 50 day average volume. Big players, institutions were moving out of semiconductors and continued their assault on financial stocks. These two industries are not the two industries you want to see breaking down with the market trying to consolidate its recent gains. While it may end up being consolidation, financial and semiconductor stocks aren’t looking that way.
