The market started the day with a nasty gap down on two possible news stories. A big jump (largest since 1974) in Producer Prices for November and a scare over a possible new Asian-market meltdown put a lot of pressure on the indexes. However, bulls remain extremely strong in the face of selling and rallied the indexes off the lows all the way into the final hour.
At the close, the DJIA rose .2%, the SP 500 also rose .2%, the SP 600 gained .1%, and the Nasdaq lagged again with a .25% loss. The IBD 100 gained .2%, keeping pace with the market.
The numbers are not that bad at all, considering that the Nasdaq was down by 1.1% at one point. The SP 500 was down .5% before coming back to close higher. The SP 600 also reversed right off the 50 dma to close with gains. Overall, very positive action, considering what could have happened.
Volume was higher on both exchanges. The decline of .25% doesn't qualify as a distribution day for IBD. However, in my books it would HAD WE CLOSED NEAR THE LOWS OF THE DAY. The intraday reversal from a 1.1% loss to a .25% loss is BULLISH not bearish. Therefore, I now agree with IBD (for a different reason) and say this can not be called a distribution day.
Breadth was mixed, on Tuesday. Advancers beat decliners by a 9-to-8 margin on the NYSE and decliners beat advancers by a 8-to-7 margin on the Nasdaq.
The morning was pretty darn wild, if you ask me. It makes me glad I don't pay attention to the news when I am placing trades. The Thailand 15% crash would have gotten me nervous. Take that along with the 1.1% decline in the morning on the Nasdaq and I GUARANTEE many traders made panicky sell decisions. That is not a smart way to trade.
That kind of action was much different than many people obviously thought was going to happen. The last two trading days markets opened higher and sold off. Today, the market gapped down hard then rallied all day long.
To go along with this, I read in Helene Meisler's article today that the put/call ratio on the indexes was 2.99 and the put/call ratio was 1.13. That is very high levels and indicate extreme fear in the market. This data along with the high level of bullishness amongst investors is very confusing. This can only mean one thing, for now: choppiness. Get ready for some choppy trading. The market has some severe extremes in market postures. Bulls are very bullish; bears are very bearish. Like in politics, there seems to be no middle ground.
However, I know there is a middle ground (since realmoney.com's poll has around 25% neutral) but they don't know what to do or what to trust anymore. They are living from one data point to the next lost in no man's land.
Overall, the trend is still very bullish. The big caps are the stocks that are resilient and are showing NO signs of selling hit them. The DJIA hit another all-time high, so, obviously, that trend is UP. So if you are bearish on this market it is simply based on "feelings." Last time I checked you can not make money off of "feelings." Maybe you can but I still have not met a professional who could.
Therefore, even though I have some red flags and disappointing results in some stocks, I am still very long and have many stocks that show NO signs of selling. The trend is still up, though there are problems in the Nasdaq and the SP 600. Until these small worries turn into a downtrend, well that is all it is. It is just a worry. Nothing that will make you profitable in the stock market.
Let's see what happens. Here is my WORTHLESS opinion. We get a little bit choppy right about here. All the above reasons make me think that. Not that it matters. What matters are my stocks. If they remain in an uptrend, I hold them. If they start a downtrend on heavy volume, I sell them. No questions asked.
Aloha and I will see you at Investors Paradise.
New Swing Longs: VEH IMMU LYTS SMOD
Adding To Longs: WRLS BOBJ RMKR
New Swing Shorts: NONE
Longs Up On The Day (low vol. non-IBD excluded): AOB-98 IIG-26 AOI-32 TTEC-59 DA-54 ICE-44 IAAC-67 HMSY-36 IHS-94 SEIC-25 MA-96 MAMA-126 MEH-58 CVO-129 CCOI-33 GVP-50 PTT-88 OMNI RRC LCC BOT COH LFL BLUD NYX TMO AMSF HOS CELG GLDN CAM BTJ DECK PQ UAUA ASCA BMC RBN MVSN CACB INAP CMT SQM NU RKT CCO VCLK MAIL JCG OPTM KOG SNCR CTCM ULTR WRLS BOBJ ACTU BITI AZK MRB AEP AEZ PNW OEH GMRK IGT NHWK WPZ ADBE MOS NAVI TTG RMKR CRT PCC
Stocks On Radar Screen: GMKT MEDX NCTY BWP PGS SNPS BRG ALXA BTM GERN DWA TIF SBGI ACTL AZO GLH CTCI MGEE IPA GMCR BTN
Partial Sells/Profits: BMRN PLB ASML JST OMCL WGA EFUT BUF LRCX ISE ILC IONA CKSW TRBN NSTC
Complete Sells/Profits: RMR PRXI BITS UCTT OMPI TCHC SUAI--this last one makes me sad I liked it so much.
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