AAPL leads the NASDAQ Higher as Volume Expands; Crude Sinks

Heading into the first debate of the 2012 Presidential Campaign was led by the NASDAQ despite a faltering Semi-Conductor sector. Small cap stocks struggled as well with the Russell 2000 closing down 20 basis points. Volume expanded on the day, but with back to back days of subpar volume on Monday and Tuesday it was inevitable volume was going to increase. This morning’s ADP Employment change report showed 162,000 jobs were add in the month of September coming in slightly above expectations. In addition to the ADP report, a better than expected ISM Non-Manufacturing reading showed the service sector expanding in September. Not terrible news from the economy, but focusing on the price action we saw the market notch a day of accumulation. We still have not broken out from our recent trading range, but price action continues to be favorable to bulls in this uptrend. It appears the market is waiting on the debate tonight and Friday’s job report. Friday’s jobs report will more than likely disappoint not because of we don’t like the current administration, but the past few reports have been disappointing. In any instance other than the unemployment rate falling below 7% the Federal Reserve stock market put will more than likely dampen any bearishness related to the report. Anything is possible in QE trading. Look at crude falling more than four points today. Commodities are perceived as a good investment with the Federal Reserve printing presses running at full tilt. So while conventional thinking is a fun cocktail party discussion only price matters in the market. Whatever the market will bring we are going to be prepared. Tomorrow at 2 pm we’ll get the minutes from the latest FOMC meeting where Ben Bernanke announced QE3. It will be interesting to see how the market reacts to what the FOMC discussed during the meeting. Tomorrow should be a fun day with the market reacting to the first debate as well as the FOMC meeting minutes. Who knows we may even get a Spain bailout rumor. There is always something the chew on when it comes down to this market. Actions however, are governed by the price movement of our stocks. Enjoy the debates, but remember to cut your losses and there are other candidates then just Obama and Romney.

The Dow Edges Higher as Broader Market Consolidates Again

Turnaround Tuesday didn’t quite work out, but for the second straight day the market puts in an excellent day of consolidation. The past two days have certainly done enough to work off overbought conditions in the near-term. Volume inched higher on the NYSE and roughly 15% higher according to preliminary stats from IBD. Monday’s volume was so light that it didn’t take much for volume to creep higher. All in all another solid day for the overall market as our uptrend continues to stay intact. A few retail stocks took it on the chin today, but all in all leading stocks held up relatively well. KORS and ROST look weak and with KORS secondary pricing soon it appears the stock wants to continue to head lower. ROST on the other hand remains below its 50 day as traders sold the stock today. The stock has been on quite a run since last August and is now looking tired. A quick observation here is QE3 will not help out retail stocks. Why? Who cares, price action in leading retail stocks shows investors are looking elsewhere. Given the back to back consolidation days we need this market to resume moving higher. At the very least leading stocks need to get going with or without the market. We have escaped distribution, but we can’t consolidate gains forever! It is important not to get impatient with the market and allow your stocks to work. But, at some point we need to keep our money moving and stocks that are not moving do not belong in our portfolio. Keep in the game! We have plenty of opportunities with this market and if you give up or “take a break” you may miss a golden opportunity. I don’t like missing out on gains and if you do it makes it infinitely more difficult to capture superior gains. Cut those losses short.

Bernanke Fails to Mention QE3; Fitch Warns of US Downgrade Sends Stocks Lower

The NASDAQ reversed its gains in a big way after the Fed Chairman does not mention further quantitative easing. To add insult to injury Fitch warned of a possible US downgrade if a viable debt plan was not forged. Preliminary volume figures does show volume was lower on the day, but the day’s action hints at how shaky this market is at this point in the game. Economic news was a non-factor and the market action centered on the Fed and Fitch. This market remains on unstable ground and we continue to lack the necessary conviction to get any sustainable rally. Ben Bernanke’s testimony was quite clear he wanted to shift the burden away from the Federal Reserve and onto policy makers. Fiscal policy has been non-existent since the Obama administration has taken office. We had a policy from the Bush administration, but it was terrible as it simply added to our debt by running unsustainable deficits. At this point, the Federal Reserve Chairman seems to be in a holding pattern until the folks on the hill get together and form a fiscal policy. We can dream of running surpluses and lowering our national debt, but it appears this is just a pipe dream. Cash seems the place to be as the market certainly has signaled a lack of direction. Sellers have appeared to dry up here at the lows, but buyers aren’t coming out in droves to scoop up shares. LULU a former leading stock was hit hard today while CMG and AAPL appear to be on the verge of heading lower. Not the type of action you would normally see in an emerging rally. While we can still move higher from here the likely hood it is sustainable is not very high. Price will always dictate our actions and we will act accordingly. However, the the information from the market in front of us our confidence is very low this rally is going to push much higher. Remember, the last Federal Reserve Bank stress test one assumption was the S&P 500 was down 50%. To think after a small correction from March highs the Federal Reserve would step in is quite overzealous. If the market needs money printing that badly we are all in deep trouble. Cut those losses.