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 Advance on Higher Turnover

A positive housing start figure gave a big boost to the futures this morning including homebuilders after housing starts jumped 12% month-over-month. Initial jobless claims fell more than expected and despite a very negative reading out of the Philadelphia Federal Reserve manufacturing index the market was able to push higher. Volume on the indexes rose above average across the board, but overall volume still remains anemic. By 2:30 the market was at its highs for the session only to be disrupted by selling at the end of the session. While the end-of-day action was not ideal it was still a very good session for the market. The move in the market today has, in our minds wiped out all the distribution days we have seen in the past four weeks. Any distribution here we’ll begin to count and watch carefully. The lows of this week must hold as well if this market wants to continue hitting 52 week highs. You’ll hear plenty of pundits tell you where they are predicting the market should head, but they’ll be wrong. Predictions are for those who need to feel smart and need to feel they know more than you. If predictions were often right you’d have a heck of a lot more “wealthy” traders sitting around. Know what you are trading, where your entries are, how much to trade, and where you exit and forget the noise generated by Wall Street. Tomorrow we’ll get options expiry and a boat load of volume. Options expiry is a day where volume can be completely ignored. It will also be interesting to see how price reacts to the volume when we have raced higher after the Fiscal Cliff “can kick” solution. We can only trade off the current price information we have and not what we “think” may happen. Anything can happen and will happen and we accept this in our trading methodology. Get out and have a great weekend!