Monday, February 27, 2012

Stocks find big support; PCLN books after-hours gains

Warren Buffet’s CNBC interview was not well received by the futures market as the market was shaping up to open lower. While I don’t think nor care if Buffet was really pushing the market lower pre-market what I do care about was the market’s ability to find support. A rush of support showed up just after the first fifteen minutes of trade, just as the market appeared to be taking a swan dive. Volume jumped on the day finishing above Friday’s level showing a few institutions joined the party today. It was important to see the market find support at the lows and now we need to see the power behind this potential move.

CNBC can’t get enough tossing headline after headline of asking if this market is tired or not. We have tools to alert us to potential trouble and it isn’t guess work. Using distribution counts we can see whether or not a market is heavy and due for a potential BIG correction. At the moment the NASDAQ has three distribution days and it is not at a point where we are going to sound the alarms. A few more distribution days and/or stalling days would certainly raise high alerts. Do not guess if something is about to occur, always react to the market and its clues. Stay disciplined and stop the guess work.

PCLN was a big winner in after-hours trade after the company beat sales and revenues. Guidance for the first quarter was higher than expectations and the market rewarded the company nicely. The stock now joins GOOG at the $600 level a big priced stock with growth is very hard to come by. Yet again another growth stock posts better than expected earnings. Let’s not forget many stocks took the plunge in October as many took down estimates allowing for comfortable beats here.

The market remains in an uptrend and no matter your opinion on the health of the trend…it remains up. You are not smart enough to know precisely when it will end and if you do I have some south Florida real estate to sell you. Always and I mean always cut your losses short.

No comments: