Monday, July 16, 2012

Retail Sales Disappoint as Tensions in the Middle East Grow

The market was showered with very disappointing retail sales figures showing the consumer cooled quite a bit in the month of June. NYSE volumed dried up significantly, but at the same time NASDAQ volume moved nearly 6%. While the NYSE indexes escaped distribution the NASDAQ did not notching its 4th distribution day over the past few weeks. The day’s action was a decent day of consolidation over the 50 day, but with distribution quietly piling up on the NASDAQ the Big Wave Trading Market Model remains neutral. Outside of earnings the market will be looking towards Ben Bernanke’s comments on Thursday. Ben Bernanke will focus mostly on the United States fiscal issues and how Europe is constraining growth. However, many traders will be looking for the Federal Reserve Chairman to talk about a third round of quantitative easing. While he’ll touch upon the subject it will be interesting to see the aftermath of his testimony. Will Ben Bernanke say QE3 is on the table and the Fed is ready to implement it? Time will tell and we’ll be ready to react. In the Middle East an interest development occurred today and that was a US ship firing upon an Iranian boat. The market did not react to much other than crude oil moving higher closing higher than a dollar a barrel. While we aren’t about to make any decisions trading based upon the idea we are going to war with Iran, but from an observation it does feel like tensions are rising. We remain disciplined in our approach, but it will be interesting to see if we get any further developments out of the Middle East. At the very least it will provide us with some fireworks. Earnings season is underway and while it has been a somewhat disappointing season so far we have the bulk of reports coming over the next few weeks. Stick to a disciplined approach: trend following. Know your exits!

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