Monday, December 10, 2012

Dull Day on Wall Street; Volume Slides Again

The only excitement of the day occurred just before the eleven o’clock hour with the market pushing to break out from last week’s high. Volume was running below average, but price action appeared to be strong. However, just prior to the breakout we saw sellers step up and prevent the breakout. AMZN and EBAY were lower in higher volume along with AAPL who closed in the red for the second straight day. CNBC continues to pound on the Fiscal Cliff issue and cannot seem to move away from it. Small Caps continue to outperform and were too close to breaking out. If we are to breakout look for Small Caps to take the lead. We have experienced another dull day in the market as we remain trendless for now. PCLN suffered a big down day with volume running more than 50% above average. The stock looked poised to breakout and run despite the 50 day running under the 200 day, but today’s action is not good for the bulls. Right now the stock appears to be stuck in its range from the summer as overhead resistance remains strong. AMZN appears to be building a handle and will need to avoid any further selling on high volume. Pay attention to the stock around its 50 day as support around this moving average will be crucial for the stock. There doesn’t appear to be many bright spots in the market at the moment, but even with a dull market the environment can change rapidly. Be prepared. The market won’t get much economic news until the FOMC rate decision on Wednesday. Many will try to game the Fed and predict what the market will do. There is an upside bias on the days leading up to the FOMC rate announcement so any breakout here wouldn’t surprise us. If we do see the market breakout we’ll go right along with it, but we’ll have an exit strategy. Last FOMC meeting the market rallied on the news of QE. Unfortunately, the rally didn’t last and we saw the market sell-off. If you didn’t have an exit strategy and were long the market thru the downtrend you suffered through a nice loss. It is always best to avoid the downturns and wait for better entry points. We are waiting on the market and there are plenty of mixed signals right now. The NASDAQ remains below its 50 day and 200 day. On the other hand the S&P 500 and Russell are sitting just above it. Meanwhile, volume remains below average.

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