Another Wild Intraday Session as the NASDAQ Closes Green for the 8th time in 9 Days

The market has become quite an interesting beast as of late with wild swings on every press conference DC makes. First Boehner’s comments sent the Dow down 50 points in a split second only to recover after Reid and Schumer respond. Nancy Pelosi was kind enough to wait for the market close to make her comments, but at the end of the day the market has moved higher again. According to Bloomberg volume was lower across the board and continues to be light overall. We are still operating without a true follow-through day, but despite the overbought conditions the short-term trend is higher. After the bell we got word the Democrats proposal would like to raise over 1.6 trillion in taxes and immediately raise spending by 50 billion. Republicans on the other hand are ready to concede the tax issue, but not the spending. For anyone to think a reasonable deal will be struck is crazy. Collecting less than 18% of GDP and spending 25% of GDP is not a sustainable model. You simply cannot overspend what you take in to eternity. It is not sustainable. We can argue over tax rates and where we should or should not cut spending, but if you can’t agree to pay only what you take in then no real solution will be had. We are now in extreme overbought territory and it would be good for the market to take a rest over the next few days. Even one day of a pull back on light volume would do this market some good. We only need to see a few days of this market taking a rest. Distribution would not be welcomed at all and we must avoid any serious price decline. If stocks are hitting buy points take the signal and have an exit plan. Hopefully tomorrow we can avoid seeing any more press conferences by any congressional member! Get out and enjoy the weekend.

NYSE Posts Second Day of Distribution as Reid Signals Congress Still Can’t Get its Act Together

For the second day in a row the Dow Jones Industrial Average, S&P 500, and the NYSE Composite posted another day of distribution. It is an ominous sign for a newly developed rally to post back to back days of distribution after a follow-through day. Positive economic news from Durable goods to housing did very little to help this market today. Sellers jumped aboard just before the 10am hour, but were held back by another intraday rally like Monday’s session. It appeared as if the NASDAQ and others were ready to bolt to higher ground before Harry Reid and Mitch McConnel spoke about the Fiscal Cliff talks. The market couldn’t rebound and ended near the lows of the session as volume jumped. This rally has a negative tint to it and the next move on volume will spell out the direction we’ll head in the short-term. Friday’s supposed follow-through day kicked off a new rally and the one thing you do not want to see is distribution within the first few days after the follow-through day. Unfortunately for this new rally is we have had back-to-back days of distribution. Monday’s intraday action was bullish, but still put the NYSE composite, S&P 500, and Dow into distribution camp. Today’s action was clear distribution and is not questionable. Distribution following a new confirmed market rally spells trouble for the rally attempt. I’d expect to see this rally fail shortly and we’ll be on the hunt for a new uptrend. If we move higher on strong move we’ll change our tune, but for now distribution is spelling trouble for this rally attempt. Financials rolled over today with the XLF rejected at its 50 day moving average. Retail (XRT) still is having trouble with its 50 day moving average despite the media’s attention on how good Black Friday sales were. Oil and Gas was the biggest drag on the S&P 500 followed by financials. A sign the market is on shaky ground is from the only sector higher on the session being the Utilities. If we don’t see the market improve here look for utilities to show strength while the rest of the market heads lower. If you jumped into the market yesterday or today remember to have an exit strategy. It will mean the difference when it comes down to your returns! Buying is the easy part.