Commodities and Technology Crumble Weakening Leadership and the Overall Market
June 22, 2009 | Comments Off
By Market Speculator
Once again Crude Oil took a major blow Monday as well as other commodity prices. The IMF revised its growth causing panic in the World Recovery thesis. Technology stocks also took a tumble Monday as investors were fleeing technology names. Stocks were simply sold today as sellers wanted to cut loose at all costs. Closing at the lows of the day is a signal that sellers are in full control. Leadership has been showing weakness for the past two weaks and is finally beginning to weaken further at an alarming rate. Very nasty action today on the indexes as the market is now in correction mode.
Big stock leadership is always a great barometer for the market. Big insitutional players love the liquidity and low beta these stocks have. The price and volume action of these stocks are very important because it displays the mentality of the big institutional player. We have seen the big stock leadership crack a bit last week but that crack widen today. Two big stocks that have performed well in this market uptrend put in very ugly days. Gold and Platinum subscribers are aware of the ones I am referring to as I posted in our forums about the stocks. This is not that time to be fighting the market trend here, do not be a hero.
The Dow Jones Industrial Average Slips with Crude Oil While the NASDAQ Remains the Leading Index
June 21, 2009 | Comments Off
by Market Speculator
Friday saw a quadriple witching day pushing volume well above Thursday’s level. The Dow Jones Industrial Average had slipped lower closing just short of a distribution day. Over on the NASDAQ, the composite index witness a day of accumulation. However, during the session the indexes were not able to hold the opening move. Sellers took over after the morning frenzy of option traders closing/rolling their positions. Only the NASDAQ was able to close above in its upper range for the day, but barely closing above its upper range. More importantly, leading stocks once again showed strength many of the leaders saw positive action. It is clear the NASDAQ is the leading major index and has positioned itself to continue it’s move higher.
We are certainly seeing a lot of positive action in leading stocks. There is also very nice action in a few big cap stocks. Institutions love playing large liquid stocks and we are certainly seeing the accumulation by the big boys. At Big Wave Trading, we are saying on top of these leading stocks and taking advantage of the gains they are showing us. Leadership is the number one factor to take a look at when reviewing the entire market. They will light the path the market will take.
After All That Bottom Fishing The Past Two Months It Looks Like CANSLIM Stocks Are Ready To Lead Next; Stock Indexes Pullback On The Week On Lower Volume
May 16, 2009 | Comments Off
Stocks pulled back this week and those that read this commentary daily know that we were expecting a pullback and we are getting it. If you remember I wanted the pullback to come on lower volume and that is exactly what we are getting on the IBD indexes, the Nasdaq, NYSE, and SP 500. If stocks continue to pullback this week, I will be more than OK with it as I think stocks are starting to look really good out there in the charting landscape. If this continues I am sure that we will be moving from trading everything breaking out in uptrends and downtrends and will be able to move on to going long the historical patterns that come about right before stocks go on major advances.
If you are not familiar with these chart patterns, you can find them on the ‘past big winners’ area at my .com site or you can visit the IBD Investors Education site and go over the historical chart patterns that lead to big gains there. If you are a subscriber you can also go all throughout the ‘General Market’ post to find a ton of beautiful chart examples of other past winners that I was not part of but have studied. The bottom line is that if you are a subscriber, you have no excuse to not know a chart pattern. We have example after winning example on the site and IBD’s past studies to look at to know what we need to see before we go heavily long.
Volume Slides as Stocks Move Higher After Suffering from Wednesday’s Price Decline
May 14, 2009 | Comments Off
The market was able to avoid further price deteriotion with a low volume move higher. Volume on the NYSE fell nearly 15% while the NASDAQ volume fell 8%. Although the rebound lacked volume it was nice to see the market not follow through to the downside. Ideally, today we would have seen institutions step up and support this market. Instead, it appears for the moment they simply stood aside while stocks moved higher. All in all not an excellent day, we just need more work if this uptrend is going to last.
The NASDAQ led the market in gains finishing up 1.5% while the IBD 100 index was right behind it. A glimmer of hope as we will need the IBD indexes take over as the leaders of this market. It will have to come relatively soon as we do have quite a bit of distribution days we are dealing with on the indexes. The Dow Jones has 5 distribution days while the NASDAQ and S&P500 have 4. When we see a major index hit 5 or 6 distribution days it ends the confirmed uptrend. It is vital we starting see the market do the following: show accumulation and all pullbacks in lighter volume with nominal price declines. The market will show us the clues it is up to us to take them and act appropriately.
The good news is we are still seeing New Highs beat New Lows but the number of New Highs slowed up today on the rebound. Again, there was underlying weakness to the move today as we are not seeing BULLISH signals. New Highs vs. New Lows is not the end all be all, but it is somewhat telling the type of market we are in. I would love to see NH vs NL stay above 1.0 even with a pullback on lighter volume to signal that there is strength within this market.
NYSE Sank on Higher Volume as Indexes Close Out at the Lows of the Day
May 13, 2009 | Comments Off
That sinking feeling ended up being spot on as stocks could not withstand the selling pressure. NYSE volume jumped higher while the NASDAQ slipped lower. However, the price destruction on the indexes have been far too much to qualify this market to be in a confirmed uptrend. It is in our opinion we have crossed back into a downtrend while this market will look for a short-term bottom. Leading stocks were hit hard; one by one they have been knocked down and out which is a BIG signal there could be more downside to come. The day certainly could have been worse, but the price action was terrible.
There wasn’t any support to be had at the end of the day like we have seen many times. Just last week Tuesday and Wednesday saw the market get support only to see Thursday’s market take a tumble on higher volume. Last week’s action, although bullish in nature was a sign of the market stalling. What is important now is to see if we can find footing in the market while having leading stocks setup in bases. There are a few left that might be able to form sound patterns and be worthy of going long. At this time, it is best to take a defensive posture and not let your capital slip away.
This Market Sure Is Giving Me A Sinking Feeling; However, The Charts In My Scans Say To Stay Focused On The Long Side, For Now
May 13, 2009 | Comments Off
The market responded well to favorable Trade Balance numbers in the pre-market. However, the grapes turned sour and selling pressure took over sending stocks lower. Volume had tracked slightly higher on the NYSE and lower on the NASDAQ during the morning and early afternoon. Finally, we were able to see buying action step in and support stocks. We saw NASDAQ volume start to pick up as buying began to pick up a nice sign to see volume support. By the end of the day the NASDAQ picked up a distribution day but with volume only up roughly 1.3% from yesterday and the support it saw intraday it was a weak distribution day. Overall, a nice day with constructive action with support.
Using the McClellan Oscillator we have seen the markets rid themselves of the Overbought Conditions it has been in since the March follow-through. This pullback has been constructive, not perfect but it has been constructive enough to support a possible move higher.
Volume slides Across the Board as Small Cap Stocks Lead the Market Lower with the S&P500 Not Far Behind
May 11, 2009 | Comments Off
Opening the week stocks end lower on lighter trade as Big Cap Techonology stocks aid the NASDAQ finishing well off the days low. The S&P500 was unable to sustain any buying as the index closed near its low-of-the day. A day of consolidation is welcomed, but having a large percentage drop is a bit concerning. Let’s not overshadow the NASDAQ’s resilency here even though volume finished the day lower. Today, in of itself wasn’t a bad day but will need to be taken into context over the next few trading sessions.
A positive note would be to see the Small Caps lead the market tomorrow in higher trade signaling the market is being accumulated. It’ll be important that we do not sell off any further on volume as this would highlight there is more weakness to come. Remember, we have come a long way off the lows and have yet to see the market consolidate it’s move. Ideally, we’ll remain quiet in the indexes over the next week or two while we have the IBD Indexes taking charge. IBD indexes are a signal of strength and will alert us whether or not the current rally has the juice to continue the uptrend. Leading stocks in leading industries are our key to this the uptrend and we are in need of their leadership.
The issue for the indivdual trader is whether or not you have been caught up in the intraday noise. It is the market’s job to wear out its participants and if you do not have a sound game plan you are going to be warn out along with your capital. If you are following the number one rules, cutting losses short you are most definitely on the path of destorying your capital. Cutting losses will save your portfolio and will keep you in the game for when CANSLIM stocks begin to start flying.
Big Cap Technology Holds Back the Nasdaq as Small Caps Lead the Market Higher on Lower Volume Across the Board
May 9, 2009 | Comments Off
By Market Speculator
It was all about the April Employment figures released by the Government this morning which showed the economy lost 539,000 jobs during the month of April. March job losses were revised down to 699,000 lost. The unemployment rate, reported by the government was 8.9%. Futures reacted positively to the news and helped stocks gap higher at the open. However, big cap technology weighed heavily on stocks yanking the Nasdaq into negative territory. Volume was running hot during the morning hours and as stocks began to see support volumed tailed off into the end of the day. The positive on the day was that stocks did not accelerate to the downside, but lacked the volume and conviction to overcome Thursday’s session.
Leading stocks were left behind has Super Regional banks led the market higher. Since the 3/12/2009 follow-through day on the S&P500 we have yet to see any of the IBD indexes lead this market. For a more sustainable move we’ll need to see the Relative Strength lines of these indexes to begin to tick higher. Today, once again the IBD indexes lagged highlighting the weakness which is leading this market.
Stocks Find Support off Lows; NASDAQ Holds Its 200 Day Moving Average
May 5, 2009 | Comments Off
by Market Speculator
Stocks were hit hard from the onset, even leaders found themselves being sold. Ben Bernanke was testifying on the hill while traders were dumping stocks. Selling accelerated as the day wore on but were able to find footing prior to lunch time. Stocks then were hit hard after 2pm hitting new lows but support was able to come in. Stocks once again were able to avoid a nasty distribution day if the NASDAQ had gone out on its lows. This market is once again proving there is an underlying bid to the market.
Two key levels were held today and an important moving average. The NASDAQ was able to hold 1750 which happens to be its 200 day moving average while the S&P500 was able to hold a psychological level of 900. Holding the 200dma is very important level for the NASDAQ as it appears we might be able to produce consolidation above this moving average. It would be a very bullish sign for the NASDAQ to consolidate at this level. Same is to be said about the S&P500 and the 900 level as consolidation above 900 would label it a support level. It is a wait and see game but so far we are seeing bullish action.
Some leading stocks were hit hard in the morning hours, but patience was rewarded as many found support. Leading stocks will always get support in a relatively strong uptrend. Remember, we are coming off lows that were well over 50% of the highs. That kind of damage will ruin many stocks. Another bullish sign is our leading stocks finding support.
Stocks Soar on Higher Volume Led by NYSE Composite and Mid-Cap Stocks
May 4, 2009 | Comments Off
top longs/(shorts) w/ TOTAL returns since 1ST purchase making me money TODAY: ASCA 37% KONG 30% SOLR 41% FIRE 26% RGR 21% INOD 29% (MANT 32% DV 25%)
From the open bell to the close stocks were being accumulated. Institutional players stepped up to the plate with cash from the sidelines. Leading the way was the NYSE Composite index up 4.16% followed by the S&P 400 (Mid-Cap) up 4.15%. Small caps weren’t far behind. Volume was up double digits (percentage terms) acorss the board marking a heavy accumulation day.
While Small and Mid-Cap stocks were the highlight of the day it is important to note the NASDAQ composite index was able to retake its 200dma on higher volume. A very important and highly positive move for the index. Although the NASDAQ has been the leading index it lagged today as other indexes are now playing catch up. Since the follow-through day the NASDAQ has been the index who has seen the accumulation. It will be important for the NASDAQ continue its lead.
Leading stocks are continuing to shine through, but the majority of that light is coming from China. China has been leading the world’s stock markets higher and have been under a tremendous amount of accumulation. We are certainly seeing this translate into the Chinese ADRs who are traded on our markets. These stocks are, if not already must own stocks by mutual funds. China is the only country in the world with MASSIVE reserves and they have the ability to take those savings and pump them back into their economy. Unlike the United States that has to borrow, China will simply use its savings and drive new investment. Continue to pay attention to these leaders as they will help push this market higher.
