After starting the day to the downside, thanks to a weak GDP report, stocks firmed up and appeared ready to close positive for the day. However, a late day report from Goldman Sachs stating that they are cutting growth forecast for motherboard shipments hit the market and stocks fell across the board.
When the final bell rang, The SP 600 and Nasdaq fell 1.2%, the SP 500 fell .8%, and the DJIA fell .6%. Leading stocks led to the downside with the IBD 100 falling 1.5%. The Philadelphia Semiconductor Sector index got hit for a 1.9%. The networking sector dropped 1.6%, and the computer hardware group fell 1.3%.
The only good news to come out of this decline was the fact that volume came in lower on both the NYSE and the Nasdaq. The volume receded a full 10% on the NYSE. This indicates funds weren’t necessarily stepping all over each other trying to dump stocks.
Decliners beat advancers by a 2-to-1 margin on the NYSE and the Nasdaq.
Despite the losses on Friday, it was a positive week for the markets. The SP 600 led to the upside with a .77% gain, the DJIA was up .73%, the SP 500 rallied .64%, the IBD 100 gained .4%, and the Nasdaq lagged with a .36% gain. Small caps are leading big caps which are leading tech stocks.
This market has been in a steady uptrend ever since the August follow-through and to get hit with one day of losses after such a nice uptrend is not something to get too worried about. However, at this point of the rally you would have to think some back and filling would be required to stage another run. Momentum is a hard beast to tame but a pullback here would be very refreshing. I don’t know if we will get it but I just want to make clear that I don’t see a pullback here as being a negative thing as long volume remains subdued.
This market has shown that it is irrational by far. Tons of stocks are getting taken out to the woodshed, once again, this earnings season and there is no signs in the charts that the damage was coming. One more time I want to thank the politicians for enacting another WORTHLESS Regulation; regulation FD. The other side of the irrationality is the constant highs in the indexes with no pullbacks. Something has got to give. When it does give, I am sure it is going to be choppy and a tiresome market. Until earnings season is over, there is still more of this irrational action to come.
I normally don’t place anything big on analyst notes or brokerage annoucements but it is clearly obvious that today’s late selloff was caused by the comments out of Goldman. This appears to be an overreaction but it also shows that bears are looking for any kind of news to jump all over. The buyers will have to come back soon so the bears don’t feel like pressing it to the downside.
Is the market going to start selling off or is this a little dip before more new highs? I don’t know. The only thing we all know is that we know nothing. The only way to combat this is to follow your buy and sell rules to a perfect T. Buying only the best stocks breaking out of clean bases with a hard cut loss plan is the best way to make money if this market shoots the moon or protect your money if the market shoots itself to shit.
I have done some portfolio cleaning and still remain very long. Getting rid of your laggards is the smartest thing to do here if you feel very uncertain. If you are long stocks that you bought a week to a month ago and it is showing you nothing or worse some losses, take some off the table. Remember, a stock after I take it or you take it should immediately move up. That is the ultimate “you got it right” tell. If the stock does not immediately move up, you know that something is not right. The breakout should have worked. The only proper move is to admit you are wrong (I know it is sooo hard; get over it) and move on.
Enjoy the weekend. I am out of here. I will see you at Investors Paradise.
New Swing Longs: MIKR ULTR GLBC
New Swing Shorts: NONE
Longs Up On The Day: TTEC-34 CHINA-27 DA-43 MA-45 Q-90 MEH-25 BRLC-34 ABI-32 CCOI-29 DECK LNET APLX MSTR LWAY ININ FORR CELG FTEK INAP CPA BEBE DUCK DKS CMCSA LINTA OMTR BMTI SAI ETE AWH TSYS CVA PHRM HGSI VCP NEWP AETH OLP
Shorts Up On The Day: MDG
Stocks On Radar Screen: KDN KKD IFLO MEND
Take All Your Proftis/Cut All Your Losses: ALXA IDXX WEBX ORB MPW CLS SIMG
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