Wednesday, November 17, 2010

Late Day Volatility Brings Excitement as the Market Awaits GM’s IPO

Market leaders did little to inspire, but we held Tuesday’s low

The market did very little to calm the nerves of anxious bulls as the Dow closed slightly lower while the S&P 500 closed just higher. Volume ran lower across the board as the market was able to hold off from moving past Tuesday’s low. Closing slightly higher the NASDAQ fared better, but the index ran into a brick wall in the last hour as sellers slammed the index. A wild ride in the last hour made the day interesting and kept traders on their toes. We did see the market close off their lows, but overall the market lacked an impressive rebound after Tuesday’s heavy volume selling.

We may be oversold, but like the market was overbought we can see this market stay oversold for quite awhile. One thing is for sure, we have cleared the overbought conditions from the September 1st market uptrend. It all boils down to your stocks and what they are telling you. Are they giving you complete sell signals? Profit taking signals? Ignore the noise and hoopla from the financial media and focus on your stocks.

Much will be made of the GM IPO as it starts trading tomorrow. At this time we do not have a specific view on GM simply due to the lack of trading history. No one really knows how the stock will act, but it does appear most feel the stock will quickly sell off as the stock begins trading. Speculation is swirling around the company, but at least in its latest quarter it did not lose money on every car it sold. Wait for the stock to trade for a few days and set up a possible IPO base before jumping in. Despite your feelings on the bailout or how the car company has been handled it may present an opportunity to make some money.

If we are to move higher will need to see a better showing out of our market leaders. Today a few leaders did make a move higher, but there wasn’t a contingent of leaders pushing the market higher. It’ll be important for the market to have the leading stocks push higher like we saw on September 1st. Remember to cut your losses short!

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