New Highs on Low Volume as Traders look ahead to the Fed Meeting Beginning Tomorrow

Another new high set by the market despite uninspiring economic data. Personal savings rate hit a new low as incomes could keep up with spending. In addition, the Dallas Fed survey dropped well below expectations. The Federal Reserve has been pumping billions into the market and we continue to see disappointing economic figures. Starting tomorrow the Fed will begin its two day meeting and all eyes will be on the Fed chief. Regardless, it is difficult to argue with the market and we’ll continue to go with the trend. Hard to fight the power of excess liquidity and it is best to stick with trend following. Friday’s GDP report was quite disappointing showing a reading of 2.5% when economists and the market was expecting 3.0%. Excuses were plenty and the market took it in stride and followed through today. Volume wasn’t there, but it isn’t a big surprise to us as we have not been blessed with institutional volume. We only get volume at the end of the month or option expiry. Price has ruled the day and will always rule. Follow it. The last two weeks has been quite a ride for the markets. Just a little over a week and a half ago it appeared the market was ready to keel over and begin a new leg down. Never doubt a liquidity driven market as we have just witnessed a market being able to retrace more than 100% from its move to new lows. We now have a situation where we have lower highs and higher highs. Not exactly the prototypical trend confirmation. Tomorrow we’ll get another read from the Case-Shiller Index as well as a reading from Chicago PMI. Flash PMIs across the globe have been disappointing. Given the weakness in GDP if estimates have not come down it wouldn’t surprise us to see another disappointing economic piece of data. The trend is still up and despite the distribution in the middle of the month. Have a great week.

A hiccup at the Federal Reserve led the central bank to release their latest meeting minutes at 9am EST. Despite several members favoring tapering the money printing operation by mid-year the market took off. Leading the charge was the NASDAQ, but on the Russell 3000 it was the most heavily shorted stocks boosting stock market gains. The Dow and S&P 500 closed at historic highs while the NASDAQ was only able to muster multi-year new highs. We are a ways off from the all-time highs set in the dot com era. Price direction has been spot on here even faced with two slight sell-offs. Stick with the trend and for now it remains up! It is clear the market favors more QE than less. Last Friday’s job report shows this economy just can’t muster enough jobs. Will the QE program work remains to be seen. Again, we have put faith in the Federal Reserve will be able to allocate capital properly to ignite the economy. At least for now a few members within the Fed are keen on curtailing the program. For now our stock market likes it giving us an uptrend to work with and when/how this will end will be something to see. Technology stocks led the way today as seen by the NASDAQ Composite gaining 1.83%. Russell 2000 was right on the NASDAQ’s heels gaining 1.8%. Small cap stocks had been lagging as of late, but finally saw a bit of reprieve from underperformance. The Dow Jones Industrial Average finally lagged as we have seen the Blue Chip index lead over the past few sessions. It is good to see the NASDAQ and Small Cap stocks lead and we’ll like it even more if they continue to stand in front. Earnings season will ramp higher with $JPM and $WFC reporting earnings on Friday. Financial stocks have been the bread winner when it has come to earnings growth for the S&P 500. Bank earnings are particularly difficult due to how much or little the bank decides to release its loan loss reserves. Of course it is a big game and more importantly price will tell us everything we need to know. However, if bank earnings can’t sustain its recent pace the S&P 500 will need to find earnings growth from another group. We continue to operate in an uptrend and cut our laggards as we move forward.

Another Late Day Rally Lifts Stocks near the Highs of the Session

The S&P 500 continued its yo-yo action finishing in the green today as volume fell across the board ahead of the Non-Farm Payroll figures. Once again in the last 15 minutes buyers stepped up and pushed stocks higher into the close. It has become clock work at the end of the day buyers are appearing supporting the market. Jobless claim figures jumped more than expected just as momentum had been to the upside. Small caps were able to jump into the lead after lagging the broader market this week. Major market averages remain above their respective 50 day moving averages and we remain in an uptrend. Commodities fell again today even as the dollar rose on the day. Natural gas still is in an uptrend completely ignoring what is going on with other commodities. SLV and GLD continued to slide lower confusing many inflationist. Remember, GLD and SLV represent paper and are not replacements for actual coinage. There is a reason gold and silver coins are in high demand and is not translating over to the paper representation of the metals. The entire commodity complex is not saying to the market the global economy is healthy. Interesting to see the number of Bulls remain in the mid-30s from the AAII survey respondents. Bears remained in the 20s. II Bears continue to come in under 20% and bulls above 50%. QE certainly has kept many bullish expecting the money printing to keep prices high. This may be true, but we are in unchartered waters and with the Bank of Japan jumping the shark anything is possible. Tomorrow Non-Farm Payroll figure will dominate CNBC for majority of the morning. The Federal Reserve has now put the Unemployment rate in big bright neon lights. Given our PMI figures released earlier this week it wouldn’t surprise me if the jobs number comes in slightly under expectations. This is just a guess and I wouldn’t even bet my worse enemy’s money on what I think may happen. We are in an uptrend and while we are seeing signs of it weakening we aren’t going to guess when this uptrend will end. We’ll stay disciplined. Cut your losses and have a great weekend!

Bernanke Presses on with QE, but Volume Drops as Stocks Close Higher

Another Federal Reserve meeting and the central bank vows to continue to print billions of dollars a month until the Unemployment rate drops to acceptable rates. Cyprus fears seem to die down as it appears Russia will protect its own and give a bailout to the small island nation. Banks will not reopen to next Tuesday, but the situation begs the question will the next EU country who needs a bailout and is not involved with Russian Oligarchs will be required to confiscate bank deposits? Philosophical question, but we digress. Price action continues to indicate this uptrend will continue higher. Volume was lower on the day despite the Fed’s Chief promise to keep the printing presses pumping liquidity. How high and how far we’ll go is anyone’s guess, but we’ll continue to operate in an uptrend. Two blemishes on the day were HPQ and FDX. These two stocks have been leading this market higher, but both today turned lower. HPQ appears to have run out of steam after doubling since its November lows. FDX earnings release disappointed the market. Falling more than 7 points on the highest volume since 2010 it blew through its 50 day moving average. FDX had been leading the Transports to new heights, but after today it places a blemish on the current uptrend. Perhaps a bigger earnings story is what happened to ORCL in after-hours trading. When all was said in down in the after-hours session the stock fell more than 7% from today’s close. The stock missed its earnings expectations and was punished. ORCL has been pushing higher and leading the NASDAQ higher along with GOOG. We’ll see how the stock reacts in tomorrow’s session, but the drop in after-hours is quite telling. Now with the Federal Reserve out of the way it will be interesting to see if the market can continue to remain elevated. Time will tell and price will guide our trading.

Volatility Jumps as the Dow closes Green while Small Caps Lag

Positive housing data kicked off the trading day with Building permits jumping higher than expected. However, it was just after the 10 am hour the market dove as CNBC blame worries over the Cyprus bailout. Volume started the day off light despite the positive housing data. Institutions were jumping in the market buying up shares as volume suggested. It wasn’t until the hysteria over Cyprus did volume kick into another gear. The S&P 500 and NASDAQ did notch a distribution day, but they weren’t as bad as they could have been if the market closed at its lows. Volatility measured by the VIX jumped more than 8% as it appears traders and PMs alike are beginning to buy protection. We remain in an uptrend and with the Federal Reserve tomorrow we’d expect activity to pick up after the Fed releases its policy statement. The Dow continues to be the leader among the major indexes. Today KO led the way for the index, but with the Dow leading it does give us pause if we’ll see this rally continue. At this point we do not have enough to say this rally is over as distribution simply isn’t piling up (YET). Leading stocks aren’t screaming higher suggesting we can continue. However, on the flip side they aren’t breaking down in droves saying we are about to crater. Stay disciplined here and do not rush in to be a hero. Wednesday’s Federal Reserve meeting will certainly be something the financial media will savior. I am sure Ben Bernanke will try to calm any fears the Federal Reserve will withdraw “support” of the financial markets. We’ll kindly remind everyone the Fed has more than tripled its balance sheet since 2008 and provided Trillions in guarantees to the market. I suppose a few trillion more won’t hurt. We are in an uptrend and while this could change tomorrow there is no telling if it will. Those who tell you they know where it is heading are full of crap. No one can predict the future. Know your exits and let your winners ride!

Global Markets Header Lower as Cyprus Mulls Bailout Terms

Over the weekend the biggest news story was the Cyprus Bailout news. The terms of the bailout had depositors losing roughly 10% of their deposits. World markets reacted negatively from Asia to the US, but unlike Asian markets Europe and the US markets were able to rebound from the lows. A bit of a blow to the housing market was a dip in NAHB survey registering at 44 down from 46 in the prior month. This did little to hold back dip buyers from pushing the markets back into positive territory by the afternoon. However, the last hour saw sellers hit back and send the indexes off their highs. Volume ran lower than Friday’s level inflated by quadruple witching. We remain in an uptrend despite today’s open and we’ll remain operating in an uptrend. Why the media is making a big deal over Cyprus is the theft of depositor cash. Cyprus is a safe haven for many Russian Oligarchs and their cash. While it is easy to say the rich should pay, but to steal deposits to increase private cash in bailouts is a tough pill to swallow. The real fear is if this will be the norm in future bailouts in Spain and Italy. At some point these two countries will likely need a bailout unless their economies miraculously begin to grow again. How safe do you feel your cash is in the bank now? Could you imagine if the Federal Reserve and the US government had taken 10% of deposits in 2009? The EU is in unchartered territory and this will be something to watch from a non-trading perspective. At the open the market opened in quite the oversold territory according to the McClellan Oscillator. The indicator has not been keeping up with the market highs suggesting the strength in the move is not sustainable. Anything is possible, but at extremes this oscillator does offer some value. Let’s not forget the Federal Reserve kicks off a two day meeting tomorrow and releasing their policy statement on Wednesday at 2pm. I do expect to see the market to at least drift higher into the Fed meeting where we’ll hear how accommodating the Fed will continue to be. When you boil it down it comes to price. Know your exits.

Dow Winning Streak Continues as Volume Expands

Once again the Dow was able to close higher as volume jumped on the day. It was nice to see volume expand above Wednesday’s level. However, volume remained well below its 50 day volume average. We can’t have everything. Jobless claims fell less than expected a sign perhaps the labor market is improving or there just aren’t that many people working to sustain a high level of job losses. Producers prices came in as expected. It appears we have carbon copies of intraday action with this market. We near lows of the session around 2pm EST only to find buyers pushing us back to the highs of the session. Sellers simply cannot find any footing to sustain any pressure. Thus, we have a lack of fear as seen with the VIX hitting another 6 year low. More gains in our uptrend and we aren’t about to argue with the market. Sentiment has swung back in the favor of the bulls with every sentiment survey showing a healthy amount of bullishness. While we do have quite a bit of bullishness we aren’t at extremes. One extreme we are at is with the II survey showing bears at 52 weeks lows. The reading of 18.8% hasn’t been seen in quite some time. AAII bears register at 32%, but the individuals in this survey typically flip flop and is difficult to get a solid reading of sentiment. On the other hand, the II survey of professionals tends to be a bit more smooth and reliable. NAAIM survey showed the positioning of its members fell a bit, but still well in the bull camp. We aren’t in extreme territory for the bulls, but with II bears in an extreme territory may at the very least signal a short-term top is nearing. We simply cannot know whether or not today was the high of the year. There are plenty of signs this market can still go higher despite the risks involved with endless QE. Inflation, so far remains tame and we’ll get a reading of CPI tomorrow prior to the market open. If you have gone to the gas station and/or grocery store you know prices have been steadily rising. However, I doubt these price increases make their way into the figure tomorrow. The government uses techniques to distort the truth in the inflation figures. Any hints at a possible early end to the Federal Reserve’s QErever plan may scare the markets. Anything is possible and if you follow price and leading stocks your trading results will be just fine! Make it a great weekend and as always cut your losses short.

European Fears Renew as Stocks Fall; VIX Jumps

Europe kicked off the selling with Spain and Italy taking on the brunt of the selling. The DAX fell 2.5% as the index fell in heavy volume erasing last week’s gains. Volume on the state side fell, but Monday’s have been light in general. Technology stocks led the decline followed by financials as NFLX bucked the trend and pushed higher. The VIX jumped above the 14 level as the fear index jumped to its highest level since the 3rd of January. Monday’s close didn’t help out the situation as sellers had the upper hand sending the market to the lows of the session. Today is just one day, but we did see a slight change in character as we have seen the market get support in the final 30 minutes. Our uptrend remains, but we are certainly on watch for our exit signals. It is no surprise Europe is back in the spot light has they have tried to implement protections that are simply band aids rather than real solutions. Iceland is a great example of what should be done, but the Central Banks are in control and would be overrun if Europe went the way of Iceland. Spain and Italy have been pounded by sellers with the DAX finally feeling the heat. In addition, Europe is facing a EURO who has been on a tear against the Yen and US Dollar. Exporters are feeling heat and with the Eurozone needing exports to fuel their economy their currency is not helping. Price action suggests further destruction. The first week of February has not started off well with today’s move. We were quite overbought after the big move in the market from the morning of December 31st. A rest here would be normal, but with the big declines in Europe a “rest” may be quite volatility. Stick with discipline and your plane and execute! The debate over the “great rotation” continues amongst market pundits. With the Federal Reserve buying $85bln in bonds a month how will yields go higher? If you aren’t going to fight the Fed in the stock market why would you fight it in the Bond market? Just follow the trend and it will treat you well. Short term Trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/4/2013 149.54 -1.12% IWM UPTREND NO CHANGE 2/4/2013 89.28 -1.21% QQQ UPTREND NO CHANGE 2/4/2013 66.48 -1.74% USO UPTREND NO CHANGE 2/4/2013 34.78 -1.61% UNG DOWNTREND CHANGE 2/4/2013 18.67 0.70% GLD DOWNTREND NO CHANGE 2/4/2013 162.00 0.34% SLV UPTREND NO CHANGE 2/4/2013 30.69 -0.29% DBC UPTREND NO CHANGE 2/4/2013 28.48 -0.35% FXY DOWNTREND NO CHANGE 2/4/2013 106.24 0.64% FXE UPTREND NO CHANGE 2/4/2013 134.06 -1.06% TLT DOWNTREND NO CHANGE 2/4/2013 115.54 1.28% UNG change in trend. Good news for those who heat their homes with natural gas!

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.

Stocks Rally to Close out the Week despite Lower than Expected Job Growth

The market was able to shake off a disappointing jobs figure on Friday morning failing to print 200,000 jobs. AAPL was another loser on the day slipping more than 2% weighing down the NASDAQ while the S&P lead by banks and energy was able to push higher. Banks continue to do well with the Federal Reserve buying their mortgage portfolios. For the week it was a monster move for stocks and a monster fall for the VIX. This market does not have any fear and traders are positioned for this market to continue to push higher. Small caps continue to dominate hitting new highs and until banks and small caps turn there is not a reason for this market not to push higher. It was a stellar week for plenty of stocks and there appears to be more gains had. However, since the 11/16 move off the lows (when we were close, but not close to a fiscal cliff deal) we have come a long ways. This is not to say we can’t continue to march along, but there are some things saying this market needs to digest some gains. The number of stocks above their 20 day and 50 day moving averages at least suggest a shorter term pull back. However, the number of stocks above their 200 day says something different. Price will dictate our actions, but it is always prudent to be on your toes. The VIX has been decimated with fear fleeing the market. VIX is simply an indicator of market position via options. At this point in time the VIX is simply telling us traders are positioned for an upside move. Albeit a crowded trade at this point, but big bets are being made for an upside move after the fiscal cliff deal. Unfortunately for the market crowded trades can work well in the short-term, but not so over the long haul. Short-term this market appears to have legs and will look for it to move higher. Another debt ceiling showdown coupled with warnings from Rating Agencies of a possible downgrade will be another treat dealt to us by DC. We would not be in this mess if DC only spent what it took in. Make it a great weekend!

Stocks Power Ahead as Strength Continues

Once again the market powers ahead in heavier trade indicating higher prices are ahead. Homebuilder sentiment came in as expected hitting 6 year highs, but a potential deal is likely in the Fiscal Cliff saga. All that matters here is we have a ton of stocks breaking out and price action in the market supporting these moves. We can debate over what printing to infinity will do to the US Dollar, but for now we have a big uptrend in our midst. At this point, not getting behind this rally will only leave you wondering later why you didn’t get on-board. Until we get distribution piled up this market is going to continue higher. The very bullish action at today’s close indicates that this uptrend is for real despite its many flaws. The biggest flaw in the market rally is the Federal Reserve debasing the US Dollar at an alarming rate. Printing more than 85 billion worth our currency and the effect it will have on our everyday life. Japan has been doing forever quantitative easing and it has failed to invigorate its economy. Maybe it will be different this time, but one thing is for sure prices all around will go higher. Initially, this will help our market given the recent price action. The real tricky piece will be when the Fed begins its exit from its endless money printing campaign. We are seeing a tremendous amount of breakouts it is a huge positive for this market. Amazing we have yet to see a true follow-through day despite today coming very close to actually being one. At this point it is about obeying the price action and knowing your exits. There are many stocks breaking out and showing tremendous strength. Ignoring the price and volume action in these names will more than likely be futile. Even if this rally only lasts a month if you have a sound exit strategy you will be out before any harm is done. Opinions mean very little in the market and the market is always right. Believe or not we have a rally and may be we’ll only squeak out a 10% rally, but one we’ll take. Remember, knowing your exits are just as important as knowing when you get into a position.

Strong Price Action Led by Banks Backed by Volume

Today we saw strong action from banks and homebuilders as the Russell 2000 led all major market indices higher. Today was quite a pivotal day with price action and volume coming together. This market still remains without a true follow-through day, but the move today was strong enough with volume to show there are legs to this rally. We may not know the extent of the money printing consequences yet (along with ZIRP), but the action we are seeing compels to act to get long the market. The market may be anticipating a debt-deal, better than expected holiday sales, or even better than expected housing data. Who knows? The fact remains we are seeing strong price action suggesting the market will continue its advance higher. Still no follow-through, but the market is doing enough to have us act on the long side of the market. The market is clamoring for a fiscal cliff deal to avoid seeing spending cuts that would immediately impact the bottom line. Sales of companies who receive orders from the Federal Government would take a hit and any deal to avoid such cuts the market perceives to be a good thing. At some point the deficit will matter and the debt will matter. At this given point in time the market does not appear to care very much about running massive deficits. The Federal Reserve has all but signaled its willingness to fund the deficits if need be. Do not let your opinions fool you from making portfolio moves. This market is poised to continue a move higher given its recent action. Missing it because of an opinion you have is not an excuse when the S&P 500 is a reaching 1500. Will it? It has the potential to, but then again do you want to regard missing a signal because of an opinion. A key component that many market pundits will leave out is when you are going to exit a position. Just because they say go long this or that they tend to leave out when to exit. We could very well move much higher, but when do you exit? Do you ride your shares through a correction? If you cannot answer your exit point it should be top priority to know when you exit. Do not waste your time and efforts looking for a fiscal cliff deal. The market is anticipating a deal and we aren’t about to wait for it to happen. If the market does roll over we have our exit strategy to protect our downside. Banks, homebuilders, and small cap stocks are leading and we are going to follow them.

The Market Shakes Off Comments from Bernanke and Close Flat

Continued positive data from the housing market helped boost the market in the early going. However, the focus would quickly turn to Ben Bernanke’s speech at 12:15. Prior to his speech this headline appeared: BN 12:15 *BERNANKE SAYS FISCAL CLIFF WOULD POSE `SUBSTANTIAL THREAT. And during his speech he stated the Federal Reserve would be unable to assist if Congress did not avert the fiscal cliff. The market did not like the sound of this and sold off as volume picked up the pace. It wasn’t before long before buyers stepped up and supported the market pushing the major averages back to flat line at the close. Volume slid on the day, but with the Thanksgiving Holiday upon us light trading is to be expected. It is hard to ignore the support we saw today and we’ll be looking for a confirmation day to switch to buy mode. The market will get initial claims tomorrow, but attention will be drawn to the European summit and black Friday sales figures by retailers. This year more roughly 45% of Americans say they would like to forgo Christmas all together this year. One would conclude with an improving economy should produce consumers willing to purchase more. Perhaps we are seeing the effects of declining real wages due to inflation caused by a Federal Reserve printing at warp speed. Will opening earlier help sales? Time will tell, but looking from the outside it does appear sales have the potential of coming in on the low side of things. Then again, the market may ignore this and move higher. Price rules above all else. A couple of big technology stocks got hit hard today. HPQ and INTC both sunk to new lows as both stocks appear to be heading into the single digits. HPQ simply cannot turn itself around in a consumer dominated commodity business. INTC announced its CEO is departing in May and the news did not sit well with the market. We know CAPEX is falling and these stocks are certainly feeling the effects of decrease spending. We await a confirmation day for this rally attempt. It may be difficult to see one with Thanksgiving on Thursday, but we have seen stranger things.

Stocks Close off the Highs but in the Green as AAPL and AMZN report Earnings

Another day and another rally attempt failing to hold the morning gains as stocks close just off the lows of the session. Oversold conditions can produce multi-day rallies, but today ahead of AAPL and AMZN the market was unable to hang onto gains. Jobless claims and new home sales weren’t overly inspiring, but weren’t awful either. During the session as stocks sold off a rumor surfaced Fitch was about to downgrade the United States, but was untrue. How this country will pay off this debt without making a sacrifice is beyond me. How any agency would have our debt rated AAA is baffling. At the end of the day the market as able to close in positive territory, but tomorrow’s GDP report looms over the market. During the after-hours session the two big stocks the market was looking at was AAPL and AMZN. Both stocks have taken a beating prior to their earnings report. First up was AMZN and at one point was down below 208 a share. It closed the after-hours session above 220. The move off the lows of the after-hours was quite interesting considering AMZN continues to disappoint. AAPL reported earnings and the reaction to the news was less dramatic than AMZN. Whether or not we feel the earnings was bad or good tomorrow’s reaction will be the most important piece for us. Tomorrow’s GDP report will be the highlight of CNBC’s morning. There will be no doubt an endless discussion on what it means for the market and of course the economy. Remember, one week from tomorrow we’ll get the October jobs report. Third quarter GDP is expected to be around 1.8% any number not reaching that potential will be a big disappointment. One can conclude a bad number would be bad for the market, but we know this may not be the case with the Federal Reserve printing money. How the market reacts tomorrow will be very important. As of late, earnings have not been too kind to many stocks and we continue to see a lot of Revenue misses. Earnings are easily “gamed” whereas revenues are not. There were many who were expecting big moves out of AAPL and AMZN. EXPE and PCLN made the big moves higher! Earnings continue to produce wild moves! Stay disciplined and have a great weekend.

The Fedral Reserve Rate Announcement Fails to Lift Stocks

There wasn’t much anticipated from the Federal Reserve today, but there was hope something may hit the wires impressing the market. New Home sales were slightly better than expected reaching a new high. However, nothing impressed the market at all and was unable to hold the morning gains. It is pretty pathetic when the market is unable to hold gains for one day. We remain very weak and in a sell signal and technology earnings continue to disappoint. Despite Buffett’s cheer leading for buying on the dip we continue to remain in weak price action. The fiscal cliff is just one issue facing this country. Many will point to the spending cuts and tax increases causing short-term pain for a fragile economy. However, the short-term view versus long-term view should be discussed. How long can we kick the proverbial can down the road? At some point we’ll need to have revenues exceed expenditures to pay off the debt and it won’t be fun. Another issue is capital expenditures or CAPEX. CAPEX spending continues to decline as the view of the future continues to be clouded. Firms are not spending their cash because they have zero visibility due to the current market environment. The Consumer is still deleveraging and corporations aren’t spending will not spell out a pretty picture for profits. Volume ended the day higher on the NASDAQ as the index continues to struggle. On the bright side of things the index remains above its 200 day moving average. Tomorrow the index will have two big components report: AAPL and AMZN. Both stocks do not look healthy at the moment and have pulled back from recent highs. We are not about to guess how these two stocks will react, but we do know when they do will affect the NASDAQ in a big way. AAPL is one of the most over-owned stocks. Many mutual funds and portfolios in general have large positions in the stock (12-13%). The exit door will be mighty crowded if holders begin to flee. Tomorrow is a new day, but what we know now is a very weak market action in the 4th year of a bull market (March ’09 – Now). Cash is king.

S&P 500 Adds to Gains as Volume Rises Across The Board

IBM weighed heavily on the Dow Jones Industrial Average today helping keep the index in negative territory while the S&P 500 and NASDAQ close in the green. Volume on the exchanges was heavier across the board thanks to earnings trading from INTC and IBM. Both stocks were able to find buyers, but failed to get back into positive territory. More trouble for leading growth stocks in the after-hours session with MLNX and ALGN disappointing the street. Banks and homebuilders continue to be the leading sectors of this market in our new uptrend. We have mentioned before with the Federal Reserve propping up the mortgage market thru its mortgage backed QE forever program it is going to help the banks and homebuilders. While this may be good for banks and homebuilders leading growth stocks continue to get hurt. MLNX and ALGN are just two examples where growth stocks are simply not in favor in this market. AAPL a bellwether growth stock remains below its 50 day moving average. A new iPad Mini may help sales, but for now buyers aren’t jumping head over heels for the stock. QE trading is supposed to lift all boats, but for now just the banks are benefiting from the program. Today marked day 3 of an attempted rally. BWT Model is back in buy mode after Monday and Tuesday’s action, but for those who follow IBD methods we have yet to confirm a new uptrend. Thursday will mark Day 4 when we would see the market confirm a new rally. We’ll need to see volume swell above the previous day and strong price action. Despite the lack of IBD confirmation we are paying close attention to the stocks that are leading. Leading growth stocks are having their trouble here and it is a sign slower growth is upon us. Stick with stocks that are leading.

NASDAQ Breaks Six Day Losing Streak; C Jumps more than 5% on Earnings

The market finally bounces from oversold conditions as volume ends mixed. Volume rose on the NYSE and NASDAQ exchanges, but SPY and QQQ volume remained light. Retail sales jumped more than expected helping set the tone early on. Sellers got the upper hand on the NASDAQ, but were quickly turned away as stocks zoomed higher into the close. Price gains were solid and although we did not see the overwhelming volume associated with institutions supporting the market. Today was day one of a new attempted rally on the NASDAQ lead by banks. Banks lead the market today on the back of Citbank’s earnings with the stock gaining 5.5% during the market session. WFC continues to suffer from its earnings report, but other big banks continue to act well ahead of earnings. GS, BAC, and JPM continue to act well and are poised to move higher. When the Federal Reserve will be buying mortgage securities from Banks it is hard to fathom the Federal Reserve will pay anything but the highest price possible. So far, the only group to benefit from QE Forever will be the big money center banks selling mortgage securities back to the Federal Reserve. We were bound to bounce from the selling we saw from last week. The NASDAQ was down 6 days straight and it is quite normal to see the market rebound. There is no way to know whether or not this will turn into a new uptrend or a one day wonder. We’ll need to see confirmation of a move higher before we get excited over one day’s action. We remain in neutral mode and until price action and leading stocks say anything different we’ll remain neutral. There is just 22 days left to the election is over and it cannot come soon enough. As soon as the election ends the fiscal cliff topic will be one in focus and one the market will grapple with and hopefully produce a trend. Today concluded day one of an attempted rally and we’ll be waiting for confirmation one way or another.

Morning Gains are Erased as Buyers Continue to Stay Away

A much better jobless claims figure helped set the early tone of the market. Unfortunately, it would not last as sellers continued their relentless pursuit. It certainly didn’t help that reports of the jobless claim figure being falsified by a large state not reporting its quarterly figures. At any rate what is important is how this market is acting and how weak leaders are performing. Is it finally AAPL’s time to undergo a big correction? Time will tell, but what we are seeing now is some big league weakness. Heading into the weekend it will be interesting to see how we close this troubling week. AAPL is a big concern due to its overall size in the market not to mention its weighting in mutual funds. Growth funds have feasted on AAPL and who can blame them with its ability to produce. However, with the stock over-owned and a LARGE part of numerous portfolios any correction could bring on disaster for those left holding onto AAPL. While the company may be cheap to growth when sellers want out the flood gates will open and when they do look out. The VIX continues to remain suppressed showing the market really isn’t fearful here. Perhaps many still believe QE forever will save stocks. This is where we get SOS – Save Our Stocks program from the Federal Reserve. There are still many market pundits hoping for the S&P 500 to finish the year above 1500 topping out at 1550 for the year. Bullishness among II survey respondents continues to be very high and with bears nearly extinct. It is easy to see why the VIX remains around the 16 level as market participants are very bullish without fear. We are no longer in an uptrend and must be vigilant by staying nimble and cash heavy. If this market turns around we’ll go with it, but for now we are in dangerous territory. Have a great ending to this week and enjoy the weekend!

Late Day Rally lifts Stocks off the Lows of the Session

The markets experienced a low volume session ahead of tomorrow’s economic data. ADP Employment and ISM Non-Manufacturing index are set to hit the wires tomorrow morning. For much of the day’s session sellers had control over the market as AAPL touched its 50 day moving average. While the market as not heading for a day of distribution price action was not looking too kind. A close at the lows would have been on the bearish side of things, but the late surge by buyers helped take the bearish tint off the market. This uptrend continues to remain intact and our current consolidation continues. Aside from tomorrow’s economic reports is the first of a few presidential debates. At the moment, according to InTrade Obama will be the next President of the United States. We can debate polls, but money speaks and it is saying Obama wins in November. Tomorrow night’s debate may very well solidify Obama’s lead or swing the vote to Romney and it will be interesting to see how the market trades off the debate. For those who believe a Romney victory will lead to a rally do not count your chickens before they hatch. Anything is possible and opinions are often wrong. Capping the week off will be Friday’s job report. Given the weak PMI figures and uninspiring economic data it is hard to believe the economy has grown enough jobs to make a difference. On the surface we’ll get a peak at what the government calls unemployment. Real unemployment is much too scary of a number to report so we get an adjusted figure from our government. The Federal Reserve has now pegged Quantitative Easing infinity to the jobless rate and now this figure has become even more watched. Is it important, perhaps, but to for our purposes it always boils down to price and leading stocks. The Federal Reserve is here to stay and print, but it all comes back to whether or not we are in an uptrend or downtrend. After a quiet two days to start the week perhaps we’ll get a bit more action tomorrow. Keep those losses small.

The 4th Quarter Starts in Lackluster Fashion

NASDAQ 100 stocks lagged the broader market lead by MSFT and AAPL as the Dow Jones Industrial Average and Russell 2000 were able to close in the green. Volume ended the day lower than Friday’s inflated figures from end-of-the-month rebalancing. Overall the session wasn’t that inspiring, but it wasn’t entirely awful. Early on in the session optimism ran high with positive news from the ISM Manufacturing Index report showing the sector expanded when expectations were for it to slow. Price paid were a bit higher, but weren’t alarmingly higher. The close was decent with buyers stepping up and lifting the markets avoiding closing on the lows. Our uptrend remains with very little distribution piling up despite the bearish opinions of the market. Today’s reversal is not what you want to see from the market. Last year, however, the first day of October was not that great either. Even the second day, 10/4/2011 at 3pm looked dire until we got a rumor of a new bailout for Europe. While things may look dire now you just never know what the market will hand you the next day. Guessing where the market will be next is not a recipe for success and continues to keep traders from maximizing potential gains. Stick to a disciplined approach and play the odds rather than simply guessing. The election is not far a way at all! It will be nice to get away from the constant stream of political ads and banter. However, for this market it does appear we are looking like an Obama victory. We can debate polling tactics and have yet to have a debate, but there is one thing that is certain: no one knows where the market is going. Will Obama help the US avoid the mandatory spending cuts and tax hikes? Will Romney? Will either candidate get our fiscal house in order? It is very doubtful either candidate will resist the urge to spend and inflate the deficit higher. Then again, the Federal Reserve is pumping $40 billion a month into mortgage backed securities and it won’t matter. In the end, focusing on leading stocks and their price action is the way to go. Leave the guess work to others. We aren’t off to the best start to the quarter, but it could be far worse. Cut those losses.