Stocks started the morning on a positive note and then took a turn for the worse the rest of the day. Possible reasons for the selling could be that traders are looking ahead and expecting a weak jobs report. Whatever the reason is, all we need to know is that sellers overpowered the buyers. That is all you need to know; the reason is BS.
At the close, the Nasdaq fell .7%, the SP 600 fell .5%, the SP 500 fell .4%, and the DJIA fell .3%. The IBD 100 led the indexes on the downside, losing .8%. However, the losses were not severe and many stocks did not take massive hits.
Volume was higher on the Nasdaq, giving the Nasdaq its third distribution day in four weeks. On the NYSE, however, volume was lower, saving the index from recording a distribution day.
Breadth was negative on the NYSE and the Nasdaq by a 3-to-2 margin.
The selloff did not discriminate against any certain sector. The selling hit the laggard homebuilders, the technology related chip stocks, and the recent leading oil stocks. The wosrt hit index was the SOX, with a 1.7% smack.
This pullback should not come as a surprise as I have been hinting that the market may need a rest up here. This back and filling is not bad for the indexes. It is the three distribution days on the Nasdaq that has to have us raise our caution. A couple more of these, along with an obvious downtrend and it may be time to raise some cash and start cutting laggards. The other troublesome part about this selloff is that this is the first one I can remember where the selling started slow and then accelerated the rest of the day.
As of now, laggards have been holds, as long as they don't hit the cut loss point. But if the market weakens, I will start cutting some stocks that are not showing me gains. A down market will take down 3 out of 4 stocks so if my stocks are not going up in a bullish market why the hell would I think they are going to go up in a bearish market.
In saying that, longs that show no sign of being cut will not be cut simply out of fear. Some distribution days and severe down sessions are NORMAL during bull markets. This helps raise the fear level and that helps stocks find a floor as stocks go from weak holders into the strong holders hands. So if your stocks show no sign of selling off, don't cut them simply because we now have three distribution days on the Nasdaq.
The market is still in an uptrend on the long, intermediate, and sub-intermediate trend. The market is now in a short term downtrend but until the sub-intermediate term turns down, there is nothing to worry about. Leading stocks are still looking healthy and are still showing great gains.
On Friday, the Labor Department is expected to say that the U.S. economy added 105,000 jobs in November. The unemployment rate is expected to rise to 4.5%, while average hourly earnings, a key inflation metric, should increase 0.3%. These numbers will be the talk of Wall Street all day long. No matter what the numbers are, you know bears are going to bitch about them and bulls are going to praise them. So if you enjoy playing that game, have fun!
I am severly overworked and there is HUGE SURF on Maui so it is possible I am taking the weekend off from my commentary. I doubt anything is going to change the overall view of the market in one day. So with that I will see you at Investors Paradise.
New Swing Longs: AMOT NHWK EOC TWLL KOG TGEN INO PCC
New Swing Shorts: NONE
**stocks w/ number up 25% or more**
Longs Up On The Day: AKAM-234 INWK-54 IGLD-53 LWAY-49 CHINA-79 HRT-46 AOI-34 TTEC-59 BMA-28 TYL-56 HRZ-85 DA-51 IHS-92 OMTR-53 TRBN-44 MA-101 ALTH-109 IDEV-50 BMRN-32 BRLC-101 PERY-31 CVO-133 MFRI-43 GLDN PQ FMCN NUE CKSW UCTT IIG OMCL BTJ ACP DLB AMSF NITE SRSL OPLK LTM WGA CRT APLX ACGL CCO VCLK PCCC ACHN NLST OSIR BMTI SGZ NRF KALU ILC PLB STSI MEMY MDF WYNN MCDT SUAI NHP KO HNZ CCBL TMO AW GENT CANI
Stocks On Radar Screen: ATLS SWSI TMI MBLX RNIN VRGY HYTM MAG GERN SRVY USEY PCR CGPI TLEO ELOY
Completely Cut All Your Losses/Take All Your Profits: CMG
Example Of Some Stocks I Will Be Taking Some Profits/Losses On: NU QD ADBE BULK RMTR CELG
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