Thursday, April 19, 2012

Stocks Reverse Morning Gains on Increased Volume

Disappointing jobless claim and existing home sales put a damper on the market at the open. Buyers did show up pushing the market higher with volume on the rise. However, buyers were exhausted and it was sellers who took over and dominated for the remainder of the session. AAPL dropped below the $600 mark a key psychology area ahead of OPEX. There were plenty of stocks like RAX who had a great morning only to see sellers take over reversing gains. Volume rose on the day and given the close there isn’t much question institutions continue to dump stock on the market. Big Wave Trading market model is once again in SELL mode.

Removing the second half of the session and this market would have been sitting pretty to push higher. Strong reversals like we saw today are indicative of a very weak market. Of course when AAPL takes a dive on big volume is never helpful for the entire market. Sure, you have outliers like MLNX on the day and certainly saw great gains. On balance, unfortunately, majority of the market saw weakness and is foreshadowing things ahead.

There isn’t any economic news ahead of tomorrow’s OPEX session. Volume should pick up due to the options expiry, but it isn’t a guarantee. We have joked in the chat room we’ll more than likely see a positive day just to confuse the masses. This is not something we would trade off of, but it would be quite entertaining to see the market push higher despite today’s sell-off.

Sentiment isn’t really telling us much here as the two sentiment survey’s we track is a bit mixed. AAII survey has bulls and bears about dead even. 31% of survey respondents are bullish while 34% are bearish. It appears neutral is where many want to be right now. II survey remains tilted towards the bulls, but with only 21% of bears being recorded it doesn’t feel like we have had a big enough correction. Bottom line it appears we aren’t near a turning point according to sentiment. If anything sentiment shows confusion.

Get out and enjoy the weekend!

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