Stocks Close the Quarter Higher Despite Disappointing Economic Data

The market was hit with disappointing GDP and Jobless claims figures prior to the market open. Then again just after the open with a very disappointing reading from the Chicago PMI. Despite the disappointing economic reports the market as able to find enough buyers to keep stocks in green territory. Small caps lagged the broader market as the S&P 500 led the way. VIX slipped again as buyers continue to remain complacent as fears over a correction are simply non-existent. Our current uptrend remains intact and although we do have a bit of distribution we aren’t going to throw in the towel on this rally just yet. GDP growth was revised up from .1% to .4%, but still below the expectations of .5%. At this rate, .5% is not going to cut it for the US. Even 2% GDP growth will not improve our situation greatly. Perhaps the size of the US economy is a hindrance, but we need growth in order to pay for all the services we want the government to provide us. It is anyone’s best guess if this translates to higher or lower stock prices. If we were growing like Chile with 5% GDP growth we’d be creating jobs like gangbusters! The economic pie needs to grow and we need policies that aid the growth. Enough of the economic talk and get back to price action. Gold and silver continue to trade in downtrends while Oil has resumed an uptrend. One commodity in particular, Copper continues to trade in a downtrend. Copper is a decent indicator of economic growth and right now it is not singing the praises of the economy. JJC is an ETF to track Copper and it shows quite clear the commodity is in a downtrend. Natural gas continues to remain in an uptrend even with some high volume down days. It wouldn’t surprise us if the October high is breached. Outside of Crude Oil it doesn’t appear the freshly minted cash from the Federal Reserve is finding its way into commodities. Enjoy the long weekend. Next week we’ll get a bombardment of Economic data from across the world. It should be a fun time. Cut those losses.

Volume Jumps after the Fed releases its Meeting Minutes

Building permits and housing starts failed to inspire the market, but the selling didn’t start ramping until the FOMC meeting minutes. Volume for much of the day was running lower than Tuesday’s level as traders were waiting on the Federal Reserve’s latest meeting minutes. Upon the release it was clear from the release the Central Bank is at least talking about ending the or at least curbing the latest round of asset buying. The minutes also revealed the Fed is a bit more optimistic about the state of the economy and therefore could reduce the size of their purchases. Sellers didn’t need much more than that to take stocks below last week’s low in heavy trade. One day doesn’t make a trend, but today we finally saw some heavy volume selling. Our uptrend is on shaky ground and it is a prudent move to make sure you have your exit strategy in place. AAPL continues to weigh on the overall market, but today sellers took to the entire market. GOOG dropped back below $800. Crude oil fell more than two points with Gold and Silver falling hard on the day. One day doesn’t make a trend, but it is these types of days where you stand up and take notice. When indexes and leading stocks get hit hard you have to take notice and adjust. Know where your exits are and make sure you stick to your plan. It will be important for this market to find its footing to keep the uptrend alive. Selling in bunches like today are a big red flag for the market. Your stocks will let you know what is going on and if you are noticing your stocks are quickly hitting your exits it is a good sign the broader market is about to head lower. We are in caution mode and will need to see this market shake off today’s selling. Know your exits! Short-term Trends: No changes for today, but any further selling we are likely to see SPY, IWM, and QQQ flip to downtrends. TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/20/2013 151.34 -1.25% IWM UPTREND NO CHANGE 2/20/2013 90.83 -1.86% QQQ UPTREND NO CHANGE 2/20/2013 67.19 -1.54% USO DOWNTREND NO CHANGE 2/20/2013 34.17 -2.26% UNG DOWNTREND NO CHANGE 2/20/2013 18.32 0.11% GLD DOWNTREND NO CHANGE 2/20/2013 151.44 -2.50% SLV DOWNTREND NO CHANGE 2/20/2013 27.59 -2.99% DBC UPTREND NO CHANGE 2/20/2013 27.92 -1.13% FXY DOWNTREND NO CHANGE 2/20/2013 104.82 0.05% FXE DOWNTREND NO CHANGE 2/20/2013 131.68 -0.85% TLT DOWNTREND NO CHANGE 2/20/2013 115.92 0.30%

Stocks Pullback in light Volume as the Market trades in a Tight Range

Today was largely an uneventful day as volume was well below average and well under Friday’s level. Sellers continue to be on vacation as buyers were able to lift the market into the close. AAPL was the talk of CNBC, but the stock remains in no man’s land despite the potential for the company to return cash to its shareholders. The Yen continued its decline as the Bank of Japan is hell bent on destroying its currency. In commodity land crude oil jumped back to 97 and appears the commodity is headed above par. It remains to be seen if these high crude prices will hurt the economy. We remain in our uptrend and at this point we don’t see enough evidence it will end any time soon. Tomorrow we’ll get the President’s view of the state of the union where we’ll l likely hear about new spending measures. FSLR and SCTY moved and while we have high crude oil prices the President will likely renew his call to invest in solar. We simply see two stocks moving and at the moment it appears the industry is improving. Free government money is nice and when you couple it with higher crude prices solar certainly looks like a hot industry. Europe continues to have issues and the DAX closed below its 50 day moving average again. The EURO has gained quite a bit because at the surface the ECB is not set out to destroy it. Our short-term trend model has been long FXE for quite some time. How long will it last? It is anyone’s guess, but for now the currency is in an uptrend. The Yen continues its decline and the dollar remains stuck in the middle. Currency markets have a funny way of making headlines and for now FXY and FXY remain in solid trends. Bulls are looking for a correction to buy and bears are looking for a correction to sell. Sentiment continues to be bullish, but either camp has yet to win. Remember to have a game plan in place! TICKER ST TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/11/2013 151.77 -0.02% IWM UPTREND NO CHANGE 2/11/2013 90.70 -0.11% QQQ UPTREND NO CHANGE 2/11/2013 68.01 0.03% USO UPTREND NO CHANGE 2/11/2013 35.12 1.21% UNG DOWNTREND NO CHANGE 2/11/2013 18.45 0.49% GLD DOWNTREND NO CHANGE 2/11/2013 159.70 -1.16% SLV UPTREND NO CHANGE 2/11/2013 30.00 -1.41% DBC UPTREND NO CHANGE 2/11/2013 28.45 -0.35% FXY DOWNTREND NO CHANGE 2/11/2013 104.42 -1.20% FXE UPTREND NO CHANGE 2/11/2013 132.94 0.26% TLT DOWNTREND NO CHANGE 2/11/2013 117.12 -0.08%

Dollar Falls and Stocks Shake-off Intraday Sell-Off

Shaking off a late morning sell-off the market was able to rebound closing near the highs of the session as volume pushed higher on the NYSE, but flat on the NASDAQ. The EURO raced higher after comments from the ECB rate announcement pushing down the dollar index. AAPL was the catalyst for both moves in the morning and late afternoon as the stock continues to move sideways after its most recent decline. The NASDAQ and Small Caps hit new highs for the uptrend a good sign for the market in the short-term at least. Our uptrend continues to play out and barring any price destruction should continue on its merry way. Gold and silver rebounded today after their most recent sell-off. Despite the Federal Reserve signaling a possible end to QE forever the metals have been able to rebound somewhat. Crude oil once again moved higher while the rest of the commodity space remained relatively flat. The inflation trade in stocks and commodities still lives. Sentiment has crept back to lofty levels for the market, but not at the highs previously seen. The AAII bull sentiment figure jumped to 46.45. This past year the high for the index hit 51.64 back in February of 2012. The market was still able to rally higher and set a new high for the rally showing sentiment is not a reliable indicator for the market. Bears came in at 26.92 well above the 52 week low of 17.18 set back January of last year. Neither sentiment readings are at extremes, but we are close. The Investors Intelligence survey showed bulls back above 50% at 51%, but no near the high of 58% set earlier. Given the recent action and the lack of ultra-bullishness it appears this market has some room to run. Tomorrow we’ll get a reading on prices on imports and exports followed by the Treasury Budget announcement at 2pm. The deficit is expected to come in at -1 billion dollars. Many took income in the month of January rather than in 2013 due to the fiscal cliff. It will be interesting to see how much money the Treasury will be able to net. I’d think the estimates are off and likely sway when the debt ceiling debate would begin. We can only speculate at this point, but something to keep an eye on. As we ride into the weekend, we expect to see this market hit new highs and stand ready to act as necessary. Cut those losses.

AAPL leads the NASDAQ Higher as Volume Expands; Crude Sinks

Heading into the first debate of the 2012 Presidential Campaign was led by the NASDAQ despite a faltering Semi-Conductor sector. Small cap stocks struggled as well with the Russell 2000 closing down 20 basis points. Volume expanded on the day, but with back to back days of subpar volume on Monday and Tuesday it was inevitable volume was going to increase. This morning’s ADP Employment change report showed 162,000 jobs were add in the month of September coming in slightly above expectations. In addition to the ADP report, a better than expected ISM Non-Manufacturing reading showed the service sector expanding in September. Not terrible news from the economy, but focusing on the price action we saw the market notch a day of accumulation. We still have not broken out from our recent trading range, but price action continues to be favorable to bulls in this uptrend. It appears the market is waiting on the debate tonight and Friday’s job report. Friday’s jobs report will more than likely disappoint not because of we don’t like the current administration, but the past few reports have been disappointing. In any instance other than the unemployment rate falling below 7% the Federal Reserve stock market put will more than likely dampen any bearishness related to the report. Anything is possible in QE trading. Look at crude falling more than four points today. Commodities are perceived as a good investment with the Federal Reserve printing presses running at full tilt. So while conventional thinking is a fun cocktail party discussion only price matters in the market. Whatever the market will bring we are going to be prepared. Tomorrow at 2 pm we’ll get the minutes from the latest FOMC meeting where Ben Bernanke announced QE3. It will be interesting to see how the market reacts to what the FOMC discussed during the meeting. Tomorrow should be a fun day with the market reacting to the first debate as well as the FOMC meeting minutes. Who knows we may even get a Spain bailout rumor. There is always something the chew on when it comes down to this market. Actions however, are governed by the price movement of our stocks. Enjoy the debates, but remember to cut your losses and there are other candidates then just Obama and Romney.

Small Caps Reverse Hard Intraday as Stocks Close Well off the Highs of the Session

Positive ISM figures helped the market surge to the session highs only to see sellers take away the day’s gains. ISM Manufacturing grew more than expected and buyers jumped at the chance to move into the market. However, by the afternoon cracks began to become apparent whereby AAPL and small caps began to turn lower. Selling continued throughout the remainder of the trading session with small caps leading the charge lower. PCLN and AAPL helped drag the NASDAQ lower, but the index was able to close in positive territory. Volume was higher on the day and with the mixed action does not instill confidence in this market. Mixed action overall and we continue to operate under a cautious buy signal. AAPL continues to struggle after its earnings release. The stock is trading quite loose and is in danger of losing its 50 day moving average. There is no doubt that if AAPL turns sour you can almost guarantee the market will move lower in sympathy. Price should dictate on how you trade and this instance there is no need to anticipate the move. Stay patient and let price confirm the move before acting. Crude oil was higher on the day as the commodity continues to hang above $100 a barrel. Given prices are staying high the continued stress on the average Joe continues. What is interesting is the math simply doesn’t compute with oil this high and the market being able to absorb the high prices. This is precisely why we only pay attention to price in this market. Our opinions are very much useless in the market as they are often wrong. Logic simply doesn’t work only price! Tomorrow we’ll get a read on the jobs market with the ADP employment report set to hit the airwaves. This Friday we’ll get a read on jobs from the month of April and if it was like last months we’ll have a very tough market to deal with. There isn’t any sense to go ahead and jump the gun because no one can predict the future, not by a long shot. Stick with the trend. Happy Trading! Cut those loses short.