Thursday, March 22, 2012

A Tale of Two Tapes, NASDAQ Continues its Outperformance

The S&P 500 and other NYSE indexes were hit with a day of distribution while the NASDAQ was able to escape. Euro contagion continue with a focus on Portugal seems to be the flavor of the month. If the market hasn’t figured it out now all the Euro nations will have to face the music at some point. Fears over continued lag in the European nations weighed on investors mind. To make fears worse China’s slowdown continues to be front and center. Its PMI continues to be weak and below 50 showing a contraction. While it is too difficult to say China is either going to land or soft the fear in the market is certainly real. A late day push off the lows of the session certainly helped out the market and this uptrend. Again, today shows this uptrend is not going to be easy and will continue to frustrate investors.

Once again the McClellan oscillator has moved into extreme oversold conditions. Remember, oversold and overbought conditions can last much longer than you anticipate. At this time, being at an extreme certainly limits the very near term downside risk. That being said, we’ll still need to stay on our toes and take our signals. A one day bounce may just be a head fake for lower prices. Stick to the game plan for now and seeing where we are at I’d expect to see the market to react to the upside in the short-term.

One positive sign on the day was the relative performance of a few leading stocks. For the second straight day we did see some bright spots from leaders. Even AAPL after posting some big gains has held up relatively well the past few days. PCLN continued on its war path pushing higher once again and the same goes for CMG. CMG is just one amazing stock. The market liked what it saw out of LULU and rewarded the stock accordingly. In after-hours NKE announced a share buy-back program boosting the stock another 1%. It would be nice to see some of the newer leadership type stocks to explode higher and produce massive gains. We have yet to see massive runs during this most recent uptrend (thanks ZIRP).

Cut your laggards and always cut your losses. Have a great weekend and stay safe.

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