Volume slides as stocks recoup most of Wednesday’s losses
December 30, 2011 | Comments Off
One more day till the 2011 books are closed up and for many professional money managers it does not come soon enough. Today’s rebound would have been much more convincing if volume had been more significant. Overall the market is simply hanging tough and it will most likely be until the New Year before any significant trend takes place. It was nice to see the market rebound from yesterday’s action, but without volume it doesn’t exude confidence in this market rallying.
A positive remains in the financials as they continue to find support and even real buyers at these levels. Now, I am not convinced banks are fundamentally sound, but I am not about to pretend I know what is going on. For now, their price action remains steady and support is coming into a few of these banks. Look for superior price support and you’ll find the banks willing to lead higher.
It would be foolish to really try and derive much else from this market at this time.
Deflation? Precious Metals Think So, Stocks Follow Suit
December 29, 2011 | Comments Off
The biggest story of the day was the move in Gold and Silver. We have heard EVERY opinion there is known to man about both precious metals, but today is very telling where both metals want to go for the foreseeable future. Stocks followed to the downside with the precious metals. Volume jumped on the day, but S&P 500 volume was 47% below average and the NASDAQ 39% below average. Hardly the scent of professional selling today; despite today being a day of distribution we’ll need to see another confirmation to the downside. If we get another slide on volume greater than today, we’ll know something is up. Today wasn’t all that bad, but it does throw up a caution flag due to the price action.
Last night I said it would take a big price decline to really call into question the confirmed market rally. Today, although not that bad could get worse. We don’t know the future we can only go by the market action today. I would certainly always be protective of our backside and avoid any heavy losses. Keep an eye out for further price deterioration to pare back any weak holdings.
Despite a Jump in Consumer Confidence Late Day Selling puts a Clamp on the Day’s Gains
December 28, 2011 | Comments Off
A real do nothing day as traders and investors come back from a long holiday weekend. Do nothing, yes; today’s holiday trade is quite meaningless as volume was quite light. NYSE volume was higher than Friday’s session, but by 1% and not to mention it was already LIGHT to begin with. The week between Christmas and New Year’s is always quite light and it really never amounts to much. Today’s action was okay; nothing great nor bad. Late day selling did put a slight negative tint on the day, but without big volume it’s tough to really put too much credence into the move. The best course of action is to protect your back side and await the New Year.
The number of stocks above their respective 20 day and 50 day moving averages does not spell any overbought conditions. McClellan Oscillator does remain at lofty levels, but nothing extreme. Perhaps we get a pull back, but again without volume it will be meaningless. Of course, the caveat would be hefty losses. Hopefully by now if you have been reading Big Wave Trading commentary big losses are never a good sign. Be smart, but don’t be a hero.
Light trade dominates the market as holiday trade sets in
December 23, 2011 | Comments Off
Institutions took an early departure from the market as volume ended lower across the board. Laggards pushed the market higher, but given the light volume day suggests bottom feeders were looking for bargains. Without volume, it is hard to put too much weight on laggards leading the market higher today. On the economic front GDP, the final reading of 2011 came in lower than expected at 1.8%. Not the type of growth you would like to see during a shaky recovery. Despite the negative economic news the market was able to push higher.
Tomorrow will more than likely sport very light volume again, but anything is possible. It would be very nice to get a big rally with volume well above average to show support for this market. On the positive side a few banks (if you read last night’s commentary you will know which two) showed strength. We are still waiting on semi-conductors to gain some traction. If you track SMH you’ll notice the ETF continues to be in a holding pattern. A surge upward on big volume would certainly be a positive signal semi-conductors are ready to run.
Keep your eye on the prize here!
ORCL and the Cloud Darken the NASDAQ Skies despite the market closing in the upper half of the day’s range
December 22, 2011 | Comments Off
ORCL’s dismal earnings report really laid the smack down on the software sector today. Heavy volume plagued many names, but none more than ORCL. Volume rose across the board, but the NYSE volume was a positive whereas the NASDAQ volume was more due to ORCL’s massive surge in volume. Simply looking at price action the day’s session was not all that bad with some positives if you completely ignore technology. Financials were a bright spot with a few stronger names are emerging, but with the technology sector getting hit hard on volume it does call into question whether or not this rally will be sustainable.
For most of the day I had racking my brain about what this market looked like to me. The more I thought about it, the more it began to become clear this market looked a lot like 2008. Now, we aren’t coming off a huge market plunge which would be “obvious” to draw the conclusion. However, the volatility as of late reminds me much of what we experience post 2008 collapse. Like the end of 2008, it wasn’t until Jan and February when the market began to roll back over hitting lows March 2009. Anything is possible, but man, this market is certainly acting much like it did in December 2008.
Stocks jump higher confirming a new market uptrend
December 21, 2011 | Comments Off
Once again Europe helped set the tone for the market pushing futures higher during pre-market hours. Buying was strong during the morning hours and continued right into the close. Quite the turnaround from yesterday’s pathetic showing by stocks. Financials helped boost stocks, but BAC volume is giving indications institutions weren’t in a hurry to scoop up the stock. Volume wasn’t too impressive as it was below average on the NASDAQ and S&P 500. Price performance was impressive, but we’ll need to see institutions step up to the plate and support this market.
Last night’s commentary was quite timely. This market as of late has been a doozey for sure. Shorts were certainly caught once again by “positive news out of Europe.” Remember, opinions are opinions and they simply do not matter to this market. Sure, everything looked real weak on Monday, but it wasn’t like volume surged in. Monday’s trade was just above the day after Thanksgiving in terms of volume. It wasn’t convincing to the downside as today’s move wasn’t that powerful to the upside. Volume can come in later as traders and investors rush back into the market chasing gains. For now, we’ll take the market as it comes to us and leave the opinion making to the “professionals” on CNBC.
Complaining about the market will do you no good too. Sure, it is easy to blame failure on anyone other than yourself. However, the market isn’t a person and isn’t out to get you. You are simply arguing with yourself. A disciplined, systematic approach is the only way to go in this market. Cutting your losses and letting your winners run is the proper way to trade this market. It is hard, but over the long-term it is the only way to survive in this market. Focus and disciplined!
When To Trade
December 21, 2011 | Comments Off
Many visitors to Big Wave Trading are investors looking for trading advice and tips, often regarding when is the best time to trade. However, deciding on when is the best time to trade can depend on a number of different factors. Here are a few points which should always be considered when deciding when to trade. Read more
BAC hits a major pivotal point leading the market lower
December 20, 2011 | Comments Off
Forget the ECB failing to give the market what it wants, non-sterlized bond purchases it was BAC stealing the show. The stock dropped below the pivotal $5 mark signaling continued selling pressure on the stock. Homebuilder confidence inched higher and even coming in better than expected. The move in the index didn’t help out homebuilders, but a positive for the beaten up sector of the economy. Selling really picked up in the market in the final hour, but volume was well below average. A very negative day for the market, but without volume this market remains in no man’s land.
It is easy to say we are going to head lower from here. My gut certainly says we are about to get hit hard here and it won’t be pretty. The last time I figured this would be the case was on October the fourth! Precisely the reason you cannot let your emotions get in the way of your trading. Opinions do not matter and they are usually wrong. Stick to price and volume action rather than your opinions on where the market is about to head. You’ll save yourself plenty of time and money!
From an economic standpoint the entire world is a mess. China’s ghost cities, European debt, and the United States monetized debt. Strictly from a pure economic stand point the market should be pricing in Armageddon. Reality is a much different place than theory and why the second paragraph of this commentary is so important.
Volume subsides as stocks finish well off their highs
December 16, 2011 | Comments Off
Economic data gave a boost to premarket futures pushing the market to gap more than one percent at the open. The euphoria at the open did not last long unfortunately as sellers took to the market. It wasn’t long before the NASDAQ dipped into the red; buyers weren’t keen on keeping the market in the green. After hitting the lows of the session the market was able to recover a bit, but was unable to sustain any rally. A lackluster day for the market after a promising start to the day and the bulls continue to wait for their Santa Claus rally.
AMZN was able to recover a bit, but like the rest of the market was unable to hold the highs of the session. The stock has been under tremendous pressure despite what appears to be a decent holiday season. It goes to show you no matter what the fundamental story may be price and volume is far superior than the fundamental story.
What is a bit amusing is the market put in Day 1 of an attempted rally. It is highly unlikely any rally here would be sustainable with the plethora of leaders being broken. If the market does rally, pay attention to potential leadership (I say with heavy sarcasm, there isn’t much) as well is overall volume. If volume cannot expand with a rally, it spells trouble for the rally. We can just take a look at what happened during the previous rally.
AAPL Staggers as the NASDAQ leads the market lower
December 15, 2011 | Comments Off
Buyers had post Federal Reserve policy statement hangover for much of the trading session. Volume rose on the NASDAQ, but fell on the S&P 500. Price action looks pretty iffy on both indices with the S&P 500 joining the NASDAQ composite below their respective 50 day moving average. AAPL continued lower as volume perked up. The stock had been consolidating above its 50 day moving average, but has succumbed to selling pressure the past two days. Even a mid-day push was unable to get the market back to the highs of the session. We remain in a downtrend and we should react as such.
In the short term the market is somewhat oversold, but in a downtrend/bear market oversold conditions can last much longer than you think they should. An interesting development is the lack of oomph in the VIX. Given the today’s move in the market the VIX, in my view should be higher. Could it be anything? It is anyone’s guess, something to pay attention to over the next few days. This situation could be brought on by options expiry this Friday.
