Tuesday, April 17, 2012

Stocks Rebound in a Big Way as Volume Slides

AAPL reversed its course pushing higher bringing the rest of the technology sector and NASDAQ higher. Volume was lower on the day suggesting the appetite to get back into stocks was not a top priority for institutional traders. It is true High Frequency Trading (HFT), Federal Reserve, and the lack of retail investors has skewed volume. We simply look at relative volume and ignore the noise. At the end of the trading session sellers took to INTC who was reporting after the close. The selling took some nice gains off the table. It would have been bullish if the market would have been able to close at the highs with volume surging. We’ll need to see the market confirm a new rally here shortly if we have any chance of notching new highs.

Economic news was somewhat mixed this morning. Housing starts dropped disappointing the market, but building permits jumped. Economic figures do make for good discussion points during cocktail parties or at the office water cooler. They should not be used for trading. Price is the ultimate indicator followed by volume. If you want to have an argument about the current state of the economy, go right ahead and pull the most recent jobless claims figure. However, it should be left aside when you are trading.

This week happens to be options ex (OPEX) and always lends itself to crazy moves during the week. One interesting area to watch for is AAPL and how it reacts around its $600 dollar market. Round numbers have always fascinated the financial media and during OPEX it will quite fun to see how the stock reacts. This is not to trade off of, but merely an observation of what is going on. Keep an eye on AAPL along with GOOG, PCLN, INTC, and AMZN this week. They make up a great portion of the NASDAQ and will have a heavy influence on how it trades.

This week has started off with a lot of fireworks and it should continue throughout the week. Sit back and enjoy! Cut your losses and remain disciplined!

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