Wednesday, April 18, 2012

Stocks Settle Lower after a Whipsaw Like Day

The market had a void to fill with the lack of economic data and turned its attention to the current European situation. Unfortunately for us the European Debt Crisis will stay with us as long as Euro Politicians kick the proverbial can down the road. Volume rose slightly on the day as the market adjusts for OPEX. Volume wasn’t overly exciting to give the indication institutions were dumping stock left and right like they were on Monday. Using the NASDAQ today was Day two of another rally attempt. While today wasn’t overly bullish at least we held within Tuesday’s range.

Today was technically a day of distribution in the markets. It isn’t until after confirmation where we worry about a day of distribution. If on day one following a follow-through day is distribution the odds are well over 90% the rally will fail. While we really don’t want to see a distribution day tucked in prior to a follow-through day the correlation to failure isn’t as tremendous if it occurred after confirmation. Keep on your toes as this market may decide to go one way or another here.

The intraday action today was quite volatile, but the action is to be expected in front of OPEX. Continue to keep an eye on AAPL as the stock trades around $600 a key psychological level for traders. If there is a battle to wage, it will be done here as market makers and option holders will adjust heading into Friday. Price is everything to us, but we do need some sort of entertainment. Unless there is a signal from price everything else is just noise.

Looking at the McClellan Oscillator we are slightly oversold, but no where near the levels we reached last week. It is quite possible we revisit them in the near future. There hasn’t been much of a recovery of stocks pushing above their 20 day this week after today’s action. We remain in limbo and the next big volume break will be foreshadowing where the market will head for the next few weeks. Keep a disciplined approach and always cut your losses short.

No comments: