Monday, March 19, 2012

Major Indexes End the Day Higher as AAPL Closes Above $600

Late day selling did put a damper on the day’s action, but small caps and NASDAQ shine. Volume ended lower, but coming off the quadruple witching Friday it would have taken a miracle to eclipse Friday’s trade. By far the biggest story of the day was AAPL issuing a quarterly dividend and a share buyback program. Perhaps just as big of a story, but will go somewhat unnoticed was the big time reversal BAC ended the day with. At the end of the day the Russell 2000 and NASDAQ lead the market higher and we continue to push higher within this uptrend.

AAPL continues to be a monster stock and the”top” calling continues. It could be a top here, but given its ability to grow and accumulate cash it is hard to believe the stock has put in a top here. Sure, the stock has been on a tremendous run and is more than likely due for consolidation. I wouldn’t jump on the short/top bandwagon just yet. It would take a fundamental shift for the company to take a turn for the worse and we’ll get its clue by the price and volume action of the stock.

BAC was another story stock today as the stock hit the $10 mark for the first time since last year. By the afternoon the story wasn’t as rosey. Sellers took to the stock knocking it off its high of the day in massive turnover. The current figure available to me BAC traded 658,840,199 shares the most since August 25th when it traded 860,000,000 shares. Today was a clear sign the stock has hit overhead resitance and needs time to rest.

A headline that crossed over CNBC’s website was the market was going to run into a dismal earnings season. Here is the headline: “Market’s Next Big Worry: A Dismal Earnings Season Ahead.” Perhaps Jeff Cox ( Senior Writer) is right the market may get a very bad earnings season. Anything is possible, but we don’t trade on guess work. Reaction to the market’s price action is much more of a reliable way to trade the market. Guess work doesn’t work and you need to leave it to amateurs.

Another story that will play big headlines is the continued surge in bond yields. TLT is a good barameter of Bonds and its breakdown below its 200 day moving average is something to take notice. The stark reality will be higher bond yields will translate to bond fund losses. Will investors stand to lose money in Bond funds as they have with equity funds? Are investors willing to tolerate bond losses and an equity market pushing into multi-year highs? Big questions to be answered and the stock market will answer them. The key will be finding the clues in price and volume action. We’ll be on top of it, will you?

Cut those losses short and have a great week.

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