The Market Hits Stall Speed as the market Digests the State of the Union

Stocks enjoyed buying through the early morning session as Europe rebounded from its recent pullback. By 10:30 the market changed behavior as it simply could not maintain its high of the day. Thirty minutes prior to the European close the market took a nose dive and hit the lows of the session. Volume was running higher throughout the session and indicating the market had begun hitting stall speed. A late day push from CSCO and AAPL assisted the market lifting from the lows of the session, but the Dow Jones Industrial Average did not escape a day of distribution. Tough to call a stall day on the NASDAQ, but for back to back days the index has been unable to hold the highs of the day. The market is having a tough time with the highs up here. We remain in an uptrend and while there are subtle signs of cracks we haven’t had an all out sell signal. CSCO reported earnings after the bell and they beat their numbers. However, the initial pop the stock enjoyed was short lived with the stock pulling back. The stock has been on a heck of a run since November contributing to the success of the NASDAQ. Given the action now it appears all is well with the stock, but tomorrow is a new day and anything is possible. If you are long the stock, just know where your exit is. It appears the past few sessions earnings have not been kind to the majority of stocks. PRLB is an exception after earnings. The stock blasted higher with volume to boot. A very good sign for those who are long the stock. PCYC was another earnings winner. CMCSA started the day off right, but like the market was unable to sustain the high. The loss of the day came from a growth stock RAX. RAX clearly disappointed the street as the stock fell hard in massive trade. This is not what you want to see out of a growth name. BWLD was another loser on the day. Earnings season has created quite the volatility in stock movements. INVN and KORS continued their slumps. There are positive and negatives to the current market rally. Everyone and their mother are expecting a pullback. When and how this market correction unfolds is anyone’s guess. It is tough to really say we have hit a market top without major distribution following these stall days. Know your exits and wait for your price signals to hit.

NASDAQ Stalls as Volume Finishes Higher

NASDAQ Composite continues to lag behind the Dow Jones Industrial Average and the S&P 500. Volume rose across the board, but remained below average. The NASDAQ notched a stall day and although it failed to register a day of distribution. Stalling days are nothing new and all it will take is for the NASDAQ to eclipse today’s high. Two star industries on the day were XLF and XHB as both groups appear to be ready to run higher again potentially in a blow off move. End of day action took the market off its highs, but the S&P 500 and Dow were able to escape too much damage. AAPL weighed on the NASDAQ once again as the stock continues to prove it is a laggard. One question would be is the stock the canary in the coal mine? There is no question AAPL’s products are great, but is the action in the stock foreshadowing something in the overall market? Or is it simply a laggard stock and should be completely ignored? Time will tell where this stock will end up. However, we know the stock is in a downtrend and is all we need to know. Wednesday we’ll see the market react to the State of the Union. President Obama’s speech is pretty much known as he will revert to ideas he trumped on the campaign trail. More taxes and more spending (disguised as “investments”) will be proposed. The President has a way of delivering a great speech and this should not be any different. Democrats will praise the president while Republicans will detest it. After the speech all eyes in the political world will pay attention to the Sequester on March 1st. A few disappoints in earnings this morning with KORS and INVN reversing gains. While KORS was a viable gap its inability to hold onto its opening price certainly puts a blemish on the stock. INVN was just terrible. In the after-hours session we had a few leading stocks have a tough time. RAX for one has been a stalwart for this market. Unfortunately, the stock fell 10% in the after-hours session. PCYC a thin name jumped 2% after reporting earnings. A stock to watch for a potential gap move at tomorrow’s open. NTGR and BWLD were on the negative side as well with both stocks falling hard. Not a pretty picture for the majority of earnings with only a few bright spots this afternoon. Regardless of your opinion of the market we remain in an uptrend. This may or may not change tomorrow, but if it does we are prepared.

Dow and S&P 500 Lead Stocks Lower as NASDAQ Finds 200 Day Support

More selling hits the street despite yesterday’s end of day rally. The 200 day provided the NASDAQ with some support, but the index failed to put in a big turn around day. Earnings continue to pour in and are only helping a few stocks. FB reported after-hours and is seeing a rush of buyers into the stock, but FB is not the norm. Volatility spiked closing above its 200 day moving average for the first time since the beginning of June when our most recent rally began. Fear has once again crept back into the market, but we lack the panic we normally see in a market bottom. Price action continues to be weak with volume still big on the downside and we remain in sell mode. Earnings season has crushed many growth stocks, but they continue to pile up. BWLD is just another victim to the earnings disaster. FB and PNRA are two bright spots, but they are the exception to the rule. NFLX was hit hard again in after-hours as the company failed to reach its user target. The stock had seen some life, but for a little over a year has been taken to the woodshed. CMG is in the same camp. The ultimate growth stock AAPL reports on Thursday and after failing to rally after its announcement of the iPad mini Thursday’s report will be important to the stock. AAPL has touched its 200 day, but has yet to top out since the 2009 bottom. More than 3 years later the stock has had a tremendous run and Thursday we’ll see if the stock can find the juice to resume hitting new highs. Commodities continue to pull back as crude oil briefly hit an 85 handle on the day. Gold and silver continue to pullback after their run up from the announcement of QE 3 or what we call QE forever. The market has now pulled back roughly 6% (NASDAQ) from the QE announcement. The market dropped roughly 3.5% from its peak from the QE2 announcement. At the moment we have support at the 200 day for the NASDAQ while the S&P 500 has yet to reach its 200 day. The election is two weeks away and it is bound to have an affect on the market. The most recent pullback has not been kind to leading stocks and it appears we’ll see this continue given the reaction to earnings as of now. Have a plan and trade. Cut losses and ride your winners. Volatility is finally showing some fear in the market and will at some point signal a possible bottom. Cash is king for now.