Tuesday, January 31, 2012

January Closes with a Whimper; AMZN Disappoints After Releasing Earnings

The early morning jolt higher the market was hit with unexpected disappointing economic news from the Chicago PMI and Consumer Confidence. While it did appear the market was heading for a day of distribution buyers stepped up just after the lunch hour. Financials reversed course pushing higher a positive sign for the market. The downside was the stalling action as the NASDAQ was unable to hold its gains from the morning. While we did see support, there weren’t enough buyers to erase the stalling action. Volume spiked at the end of the session as monthly rebalancing always ushers in a big volume spike. All in all, today wasn’t too bad of a day for now.

Historically speaking February isn’t typically a month where you would expect a big rally to kick off, but we did see in 2010 where February kicked off a sizeable rally. It is anyone’s guess whether or not we take off from here or reverse course and head lower. A sound plan to attack the market is paramount; if this market is to go higher we want to take advantage. On the flip side, we don’t want to be exposed if this market is to turn lower. Cutting losses and your laggards is a prudent course of action.

The Golden Cross occurred on the S&P 500 a bullish “technical” indicator. We pulled data from Yahoo for the S&P 500 and found 80% of the time this is a bullish indication for the market. What you learn by crunching the numbers is cutting your losses improves your performance. Precisely why we stress the need to cut your losses quickly, it is your insurance policy. We now await the NASDAQ to join the Dow Jones Industrial Average and the S&P 500 to experience the golden cross!

Cut your losses short.

No comments: