AAPL Keeps the NASDAQ Afloat as the Market Aways Earnings Season

Coming off a holiday week stocks ended slightly in the red with volume coming in higher across the board. The Dow Jones industrial average along with the NYSE composite both notched distribution days, but the NASDAQ and S&P 500 skirted distribution. AAPL was certainly a star of the session despite volume coming in lower for the stock. Today’s action comes as no surprise to us as many market participants were coming back from vacation. The market clearly is waiting on earnings and first up to bat is Alcoa. We are still in a weak buy signal and we’ll continue to act accordingly until the market tells us otherwise. It is nice not having the troubles in Europe dominate the talk on the air waves. Well, there was some talk, but not the pounding on the table many have been doing nowadays. Attention is now being drawn towards earning season and it will be interesting to see how the market reacts to the many companies reporting on their earnings. NKE and F are two examples of where the global slowdown is clearly hurting them on the top and bottom lines. We’ll sit back and where we need to take action we will and will not be guessing on the direction of stocks will take prior to earnings. We follow trends and certainly do not guess where they may happen next. Alcoa reported better than expected earnings and revenues after the market close. It reaffirmed its guidance for demand, but has yet to express any global growth. The stock was up more than a percent after releasing earnings, but now is hardly above where it closed. AA is not typically a name we’d like to get after since it isn’t a growth stock, but from an economic stand point it is a barometer. The lack of oomph in the after-hours session is quite puzzling and while we aren’t going to act upon it we can certainly ascertain something isn’t quite right. Earnings season has officially begun and let the games begin! A few leaders held their ground while another was unable to hold a key moving average. Both V and MA traded down to their 50 day moving average. Finding support, both stocks were able to hang above their respective 50 day moving average. On the other hand, LNKD was unable to hold its 50 day average. While volume was not above the average volume, it was the most volume seen by the stock since the day the Russell indexes rebalanced. The stock has been climbing on tepid volume and today’s action doesn’t bode well for the stock going forward. Remember to know where you are going to sell out of a position! Cutting your losses is your number one priority. Profits take care of themselves, but losses never do.

Merkel Cancels Meeting Sends Stocks off the Lows of the Session

The morning got going with GDP coming in-line with expectations. Putrid growth of 1.9% was in-line with expectations, but far from where we should be 3 years removed from 2009 lows. Shortly after the market opened the Supreme Court upheld Obamacare and the market got interesting. Stocks ended up heading lower after creating a bit of intraday volatility. Nearing the end of the day it appeared sellers were about to unleash on stocks, but Angela Merkel had other ideas. Sending the EURUSD currency pair higher, Merkel canceled her press conference and sent US stocks well off their lows. Hope is still alive the EU summit will produce a solution to European lows. The underlying story of the day was the brutal beating leading stocks took during the day. Big Wave Trading remains in sell mode and today’s craziness confirms our market model. The crazy moves the last two days at the closes on rumor is quite astounding. Yesterday we had the Supreme Court decision shooting down Obamacare. Now, we get Merkel cancelling a press conference and the European Union is saved for another day? Debt on top of more debt is not a solution and at some point hits the point of diminishing returns. Tomorrow, despite the bar being set low will certainly provide some more fireworks. After-hours today RIMM reported terrible earnings as the company continues its downward spiral. It is no surprise the stock continues moving lower. NKE on the other hand was a leading stock and its after-hours action is very troubling. UA another leading stock was hit in sympathy and not to mention has broken down lately. It is never a good sign when leading stocks get hit hard. There are other leading stocks breaking down leading us to be very cautious. We are in sell mode for a reason and until the market can turn around with leading stocks we’ll stay in sell mode. Next week we’ll get holiday trading with the fourth of July landing smack-dab in the middle of the week. Get out and enjoy the weekend!

A Tale of Two Tapes, NASDAQ Continues its Outperformance

The S&P 500 and other NYSE indexes were hit with a day of distribution while the NASDAQ was able to escape. Euro contagion continue with a focus on Portugal seems to be the flavor of the month. If the market hasn’t figured it out now all the Euro nations will have to face the music at some point. Fears over continued lag in the European nations weighed on investors mind. To make fears worse China’s slowdown continues to be front and center. Its PMI continues to be weak and below 50 showing a contraction. While it is too difficult to say China is either going to land or soft the fear in the market is certainly real. A late day push off the lows of the session certainly helped out the market and this uptrend. Again, today shows this uptrend is not going to be easy and will continue to frustrate investors.

Once again the McClellan oscillator has moved into extreme oversold conditions. Remember, oversold and overbought conditions can last much longer than you anticipate. At this time, being at an extreme certainly limits the very near term downside risk. That being said, we’ll still need to stay on our toes and take our signals. A one day bounce may just be a head fake for lower prices. Stick to the game plan for now and seeing where we are at I’d expect to see the market to react to the upside in the short-term.

One positive sign on the day was the relative performance of a few leading stocks. For the second straight day we did see some bright spots from leaders. Even AAPL after posting some big gains has held up relatively well the past few days. PCLN continued on its war path pushing higher once again and the same goes for CMG. CMG is just one amazing stock. The market liked what it saw out of LULU and rewarded the stock accordingly. In after-hours NKE announced a share buy-back program boosting the stock another 1%. It would be nice to see some of the newer leadership type stocks to explode higher and produce massive gains. We have yet to see massive runs during this most recent uptrend (thanks ZIRP).

Cut your laggards and always cut your losses. Have a great weekend and stay safe.