Thursday, October 14, 2010

Stocks Slide in Last Hour of Trade, but End Higher on Volume

Current uptrend logs another day of accumulation

Late day selling dampened the mood, but an overall positive day in the markets. Volume jumped across the board as the market mostly cheered about positive earnings reports and tepid inflation readings. Import prices were relatively in-line with expectations despite the overwhelming talk about the Federal Reserve second round of monetary easing. The late day selling is not surprising considering the move in the markets, but the action from stocks post earnings reports leaves a sour taste in the mouth. Even with the weak close the market is still in a solid uptrend.

The weak close suggests we may see a pull back tomorrow. The chances are good we see the market take a breathier. Consolidation is a necessary process for the market to undergo as we simply cannot go straight up. These periods can last a few hours in rare cases to a few days. As long as we do not see market leaders collapse and distribution the resting period is quite normal action. Pay attention to your stocks, if they begin to weaken take notice and make sure you are taking profits.

The earnings curse once again hits this quarter with JPM, IGTE, and ADTN reversing after seemingly good earnings reports. JPM stock is far from one we would like to be long, but the action in IGTE and ADTN both leaders are slightly troubling. Both were able to find support at their 50dma, but their charts are now damaged. It will take some time to repair the damage done today, but it isn’t something we would want to stick around to wait for. We’ll need to see the stock tighten up and form another base before we would get long.

Another big deal of the day was AAPL stock hitting the $300 market. The stock was able to hang onto the mark as the company said it would release a new operating system. AAPL stock has been a stalwart of this market rally and has yet to suffer any major setbacks. If this market is to go higher, we’ll need to continue to see strength in the market.

In a surprising move a deal for YHOO stock surfaced after-hours pushing the stock higher by 13%. The move will certainly help the NASDAQ tomorrow, but the question will be if the rest of the market will respond positively to the bid for a beat up technology stock. On the other hand you have ORCL posting a strong day without a takeout rumor. Ideally, you want to own a stock that is strong and not guess whether or not the stock may be taken out.

Be mindful of your losses, always cut them short.

Top Current Holdings With Total Returns That Closed Higher Today: JKS 140% JOBS 65% LGL 64% RES 57% MIPS 47% SOL 41% ISLN 31%, IVN 30%, NSU 24%, CGNX 21%, XXIA 21%, GBG 20%

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