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%

NASDAQ Lags as S&P 500 Ends Flat as Volume Slides; European Woes continue

Overnight the Nikkei jumped 3.8% as the country remains hell bent on trashing their currency. Europe resumed moving lower as the DAX fell more than 80 points. On this side of the pond futures were lower on the moves in Europe. Just before lunch time rumors of a special dividend helped send the stock higher dragging the NASDAQ along with it. Just after noon time fortunes for the market reversed and the market headed back to the lows of the session. It appeared as if sellers were going to rule the day. At the close, buyers were able to get the market back to breakeven. Our uptrend remains. Tomorrow we’ll get a rate announcement from the ECB followed by Draghi’s press conference. The EURUSD has been on a tear as of late as the US and Japan intend to print their respective currencies to oblivion. At this point the ECB can only cut rates as it cannot monetize debt. Draghi’s comments has moved the markets before and tomorrow shouldn’t be any different from the past. Which direction shall the market respond is anyone’s guess, but given our current uptrend we are going in long. There is some bright spots out there including DDD and SSYS. Banks continue to act well lead by BAC, GS, JPM, and one of our new longs for tonight. The action in EXPE left a bit to be desired and it appears more and more stocks reacting to earnings aren’t able to hold their breakouts. AMZN is one while having a rich PE has been performing well until the most recent earnings report. Another blemish is the two leading stock indexes we follow remain underperforming the overall market. This can change in a hurry, but we are keeping an eye on our leaders. Tomorrow morning will hold some fireworks and we are looking forward to seeing how our stocks react. Cut those losses short. Short-term trends: TICKER ST TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/6/2013 151.16 0.07% IWM UPTREND NO CHANGE 2/6/2013 90.46 0.42% QQQ UPTREND CHANGE 2/6/2013 67.24 -0.33% USO UPTREND NO CHANGE 2/6/2013 35.04 0.03% UNG DOWNTREND NO CHANGE 2/6/2013 19.36 0.94% GLD DOWNTREND NO CHANGE 2/6/2013 162.39 0.27% SLV UPTREND NO CHANGE 2/6/2013 30.81 0.16% DBC UPTREND NO CHANGE 2/6/2013 28.55 -0.14% FXY DOWNTREND NO CHANGE 2/6/2013 104.85 0.07% FXE UPTREND NO CHANGE 2/6/2013 134.13 -0.41% TLT DOWNTREND NO CHANGE 2/6/2013 115.98 0.82% QQQ changed back to an uptrend. This is due to the short-term nature of signals generating more signals.

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 Suffers as C and BAC Enjoy Big Moves

A wild day on Wall Street as stocks stage an intraday reversal only to give back gains at the close. Once again the market was ready to fall apart and we were able to find buyers at the lows. AAPL tumbled hard while BAC and C raced higher. The market liked these two gigantic banks were cutting costs by eliminating jobs. Volume rose across the board giving the NASDAQ a day of distribution and stall days for the S&P 500. At one point it appeared the Dow would put in a follow-through day (and NASDAQ a distribution day), but ended the day in stalling action. We are still without a confirmed uptrend and wild intraday action. In addition, we still have failing breakouts. Adding all of this up cash is very much king. All eyes will be on the ECB tomorrow morning. Since the last ECB meeting the economic landscape in Europe has not improved, but worsen. Expectations is for the central bank to leave rates steady as borrowing costs across the continent have dramatically been reduced. More importantly, it will be how the market reacts to the central banks comments. Given the movement off the recent lows the European stock markets are expecting the central bank to produce something for them to continue their trend. After the ECB announcement we’ll get initial jobless claims and a look into Friday’s job report. Let the fun begin from CNBC and their over-analyzing the data and blaming Sandy. Market action is where our attention will be focused. There is something sinister going on with AAPL. Perhaps the rumor of a dramatic reduction in demand or some fund was forced to dump was the cause of the sell-off. To be honest, we do not care the reason for the decline and what we know was today the stock sold off in heavy volume. The stock’s trend is down and it appears there isn’t much that will stop this stock from taking out the November 16th lows. AAPL is a beloved stock and owned by many institutions and if the selling continues the exits will become very crowded. Do not be a hero. The NASDAQ remains below its 200 day and 50 day with the S&P 500 continuing to find resistance at its 50 day moving average. Until we see these indexes move above these moving averages with conviction and without a follow-through day the long side is not safe. Cash is king and we continue to tread very carefully in this market.

Stocks Stage Powerful Rally as Volume Swells

Mario Draghi and the ECB took center stage this morning announcing a new bond buying program. The ECB delivered on its rhetoric it would do all within its power to save the EURO. Stocks cheered the move and futures rallied. ADP employment figures came in better than expected as well as jobless claims. However, neither the ECB nor these economic reports got the market moving like the ISM non-Manufacturing index. Institutions stepped in a big way scooping up shares after the service sector expanded. Buying continued and the gains of the day were locked up with the market closing at its high of the day! A very bullish day and today is precisely the day we were looking for as a continuation of the summer uptrend. There are plenty of stories out there with all the hedge funds and other institutional players that are massively under invested. Headwinds like the fiscal cliff and European debt crisis have kept many market players from investing in this market. Missing out on today’s move is certainly going to set back many, but the problem really is having an opinion on the direction of the market. If you simply followed where price was telling you wouldn’t have missed out on the rally today. Ignore the headlines you read and follow the price action in the market. Sentiment has been mixed with neither side reaching an extreme level. This week’s reading from the AAII sentiment survey showed bulls and bears equal. The market has been consolidating its gains from the June lows and it is no surprise there was neither a bullish or bearish tint. However, it does showcase how many people missed the rally today. Now, will we see immediate follow-through from today’s action or do we see this rally fade? Until price tells us otherwise we are are going to push forward on the long side! We witnessed a very bullish day ahead of tomorrow’s job report. Unemployment is expected to hold steady at 8.3% and roughly 130,000 jobs added in the month of August. It would be nice to see the labor participation rate to expand and the unemployment rate to drop. That would be very nice. When all is said and done it is about price and we’ll act accordingly. Have a great weekend.

NASDAQ Stalls as the Market Ends Mixed

Friday’s early evening news regarding AAPL’s patent fight with Samsung helped boost the stock today sending the NASDAQ higher at the open. The initial pop in the NASDAQ was certainly attributed to AAPL’s move, but stock would stall out before the lunch hour. A steady decline into the end of the day with the exception of a last two minute rally had stocks near lows of the session. Volume ran higher on the NASDAQ, but with volume so far below average it is very hard to label today as a “stall day” adding to our distribution count. The current rally is hanging in there and with the final week of summer upon us trading should stay light until after Labor Day. Today’s price action wasn’t ideal for an uptrend. A gap reversal like we saw today is normally a bad sign for the market. However, with AAPL providing the majority of the boost for the NASDAQ and very light volume anything is possible here. We are essentially discounting the move in price due to the obscenely low volume. The real players will all return after Labor Day and we’ll certainly see volume pick back up. The lone bit of economic news came from the Dallas Federal Reserve Manufacturing activity index. Economists polled expected a drop of 6.5 while the reading came in better at -1.6. Essentially the Dallas Fed saw a slowing, slowing manufacturing pace. Later in the week we’ll get another GDP reading which will likely show tepid growth. Second quarter growth is slated to come in at a wonderful pace of 1.7%. If you did not detect sarcasm there was plenty of it in that last sentence! Where are our 4% GDP days? Perhaps at some point we’ll get there, but when is the biggest question no one can answer. It is nice to see some of our stocks soar. A prime example of one we’ll be taking some profits on is NTE. We’ll continue to take advantage of this market as opportunities present themselves. Headlines will start rolling with Bernanke at Jackson Hole this week and you never know with the ECB’s Draghi providing headlines. We’ll stick with our disciplined approach and follow price. We’ll let the guess work to others. Make it a great week.

Fed Chief Says No to QE and Stocks Respond by Closing Lower

Leading up to the Federal Reserve rate annoucement was the big story was the software glitch hit by Knight Capital. Gigantic volume struck the NYSE causing very erratic trading in nearly 150 stocks. Just when confidence in the stock market is grim we get another flash crash incident. At least the news story distracted the majority prior to the Fed Announcement. Disappointing the market the Federal Reserve failed to deliver a new quantitative easing program. NASDAQ and Small Cap stocks lead the market lower with the Russell 200 finishing down more than 2%. It certainly doesn’t help when Knight Capital is down more than 33%, but small cap weakness continues. Preliminary volume indicates the NASDAQ was able to avoid a distribution day despite the losses on the session. Not a great day for bulls as the market will be hyper-focused on the ECB tomorrow before the opening bell. While the markets closed up lower the VIX failed to rally to show fear amongst sellers. The VIX has not been signalling any fear in this market. Today was no different despite the market not getting another round of QE. The lack of fear in the system can mean many things, but one thing it tells us upside will be limited and any large gains are a ways away. In addition to VIX, bond yields lept and closed higher after the Fed announcement. Rising bond yields and falling stock prices aren’t usually a norm. Sure, rising bond yields are a negative for the government and its financing activities. For stocks, from a historical view rising bond yields have been a big positive for the markets. While today may be an anomaly, it will be something to pay attention to going forward. Now it is onto the ECB tomorrow and then the July jobs report on Friday. More fireworks are set to hit the market and we’ll be ready. Remember, rule number one of cutting your losses!

Energy and Financials Hold up the S&P 500

The S&P 500 and the NASDAQ are barely hanging onto their respective 50 day moving average as the Federal Reserve meeting minutes fail to spark buyers or sellers from jumping in with both feet. Crude oil was the big story on the day with the commodity jumping more than two points helping out the energy sector. Saving the S&P 500 the energy sector gained more than 1.4% on the day while the financial sector gained nearly .8%. Without the help from these sectors the S&P 500 would have sunk hard. Leading stocks continue to be sold off as another signal of weakness in this market. The market was able to overcome some selling after the Fed minutes and is a slants to the positive side of things. Big Wave Trading market model is neutral and we’ll need to see a big volume push to either side to get us in either direction. Volume was mixed on the day with surprisingly volume higher on the NYSE and lower on the NASDAQ. As of late we have seen the opposite situation where NASDAQ had seen the volume come in higher, but NYSE lower. Perhaps today may signal a change in the recent short-term trend (down), but it is hard to get too excited when leading stocks aren’t the ones showing the support. It appears the market is ignoring the lack of commitment currently from the Fed to do QE and wants to push higher. We aren’t about to guess where the market is heading next and we’ll continue to follow our rules based trend following system. Tomorrow morning the ECB will come out with a few items and it appears the market is expecting them to talk about increasing the fire power of the ESM and EFSF and LTRO. These are all short-term fixes to a long term problem. Unfortunately, for the Euronations they need to swallow the hard pill Estonia and Iceland did to recover from this problem. Defending the status quo will always lead to a bigger problem down-the-road. Our focus remains on following our rules and pushing forward regardless of the direction the market takes us in. While we may have opinions they aren’t mixed in with our trading. Rules based systematic approach to trading stocks is our niche to beating the market.