Monday, April 02, 2012

Stocks Kick the Quarter off in the Green but Volume Slips

The second quarter of 2012 got off on a good foot with Small Caps leading the market higher. Volume slipped off of Friday’s levels indicating traders and investors alike were not overly eager to buy up stocks. Positive news from ISM readings where the ISM Manufacturing index ticked higher than expected and prices paid came in lower than expected. Buyers stepped up and pushed the market higher where stocks finished up. Leading stocks enjoyed a boost today outperforming the broader market a positive sign for the market overall. If we ignore volume today was a solid day for the market.

This week is a holiday shortened week due to Good Friday’s market close. Banks are open! Holiday trading always tends to be light in volume and you can forget about weekly volume surpassing last week’s volume. If the market can avoid major distribution and reward leading stocks we’ll be sitting pretty for this uptrend to continue.

Small caps have been struggling to break out as of late and continue to lag behind the NASDAQ and S&P 500. The group led the entire market today and is looking to breakout once again. It would be a great sign for the market if this group can start to move again and lead the market. Big cap stocks in the NASDAQ and S&P 500 have been leading the way and while we won’t argue with the market we would rather see small caps lead. A healthy market needs small caps to lead the way and they just might be on their way.

The conclusion of March Madness is here and we’d be silly to go with Kansas to win. Our apologies to Kansas fans, but Kentucky has one heck of a team. Kentucky’s best 7 players all averaged 25 points or more in High School! Kansas needs a miracle. Enjoy the game!

As for this market, we continue to operate in an uptrend and without any distribution piling up on the NASDAQ it is hard to bet against this market here. Until we see reason to get super defensive we’ll operate on the long side.

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