Stocks Find Strength at the Morning Lows Closed just off the Highs of the Session

After the recent bout with selling the market was able to find buyers pushing the market higher as volume swelled. Whether or not it was managers trying to get in their trades prior to leaving the Hamptons or Shore doesn’t really matter. Expanding volume as price moves higher is generally a good thing. Just after 10:30 AM EDT it appeared as if sellers were winning the day and would extend the trading losses. However, the market was able to find buyers willing to step up and scoop up shares. We did not hit new highs today, but the action was certainly bullish enough to suggest we may have another new high. Stick with the trend. Sentiment indicators crept towards the bullish tint, but not in huge waves. AAII Bull increased to 39.5% from 34.62% last week. Bears jumped too from 25% to 26.65%. Clearly more of the crowd edged towards a bullish stance week over week. However, we aren’t seeing extremes where Bulls exceed 50% and bears are well under 20%. NAAIM sentiment survey showed rose slightly from 74% to 75% invested. This move doesn’t exactly scream over exuberance from money managers putting money to work. Again, price action certainly hasn’t suggested we are at a top and even sentiment hasn’t suggested we’ve hit one either. Market leaders continue to act well in this environment despite a few mishaps with earnings: GMCR and SCTY. Even GMCR which reacted poorly to stop didn’t end the session in terrible fashion. TSLA performed well after earnings and continues to be a leader. PCLN reported today and is jumping nicely in after-hours trading at the moment. If you stick with market leaders and stay disciplined you can reach outsized gains. It takes following the methodology and not making reckless decisions. Many will still try and call a market top here. They may be right about this market and we’ll go lower. However, what we know right now is we remain in an uptrend and we are going to stick by our process. There is no need to be a hero and turn into a zero. Longevity is the name of the game and we are here to build long-term success. Have a great weekend.

Stocks close in the Red; Volume ends Mixed

Continuing with the summer trade the market closed lower lead by the Russell 2000. The NASDAQ posted back to back losses while the S&P 500 losing streak extended to 3 days. We did see a nice rally off the lows, but as soon as the rally began volume was sucked out of the market suggesting sellers left the building. NASDAQ volume did end the day higher notching another distribution day for the index. However, given the move off the lows it wasn’t a terrible distribution day. Many are blaming “The Taper” for stocks selling off. Perhaps the reason is the taper, but we aren’t picking up what the pundits are putting down. Our uptrend remains and we continue to monitor our positions and their respective price action. Solar stocks took a hit after earnings out of FSLR weren’t warmly greeted by the market. Homebuilders once again were to the downside with the entire group showing very negative price action. Given the market is in an uptrend shorting stocks is a fools game. The reason to highlight homebuilders is very simple. They were leading the market higher and now have rolled over. Financials are the only group showing strong earnings growth at the moment and if this group rolls over we’ll take notice. Earnings continue to pour in and we continue to monitor for earnings gaps. Quite a few stocks are running ahead of earnings making it quite difficult to buy with them being extended. We need sound patterns to make use of earnings. We aren’t about to gamble our capital going outside our process. Stick with the plan and execute. No need to be a hero in this market. Tomorrow we’ll get another week’s worth of job data from Initial Jobless Claims. Hard to believe this number used to be meaningless. It’s not hard to believe given the financial media’s need to fill the airwaves. You do not get an advantage by gaming initial jobless claims. It would be wise to avoid that type of trading. In after-hours trading TSLA turned heads again with its stock nearly up 10%. GRPN is another stock moving higher. SCTY and GMCR aren’t so lucky. Ride your winners hard and dump your losers.

Light Trading Volume persists; Stocks pull back notching a Day of Distribution

A better than expected Homebuilder sentiment reading failed to lift stocks and sent homebuilding stocks lower. Trading volume rose above Monday’s level, but again was below average. The major stock indexes did notch a day of distribution in technical terms. However, the damage was minor and we are considering this to be a light distribution day. The S&P 500 and NASDAQ Composite ended its win streak at 8 straight days of gains. Traders now await Ben Bernanke’s testimony tomorrow. There were pockets of weakness, but until we see more of this action this uptrend still is in play. TSLA was the talk of the town after the stock fell more than 18 points. The stock has had an amazing run since its initial breakout in April. The stock has more than tripled from that point to now. It is not unlikely to see the stock break after hitting new highs. If you bought the recent low volume breakout you are likely underwater and highlight a point of being nimble when buying extended stocks. However, if you are in from April you have plenty of leeway. Just remember to take profits along the way. If you have a sound trading plan you aren’t panicking over the move. If you are, come join us. Yesterday we pointed out the homebuilding sector as being weak. After initially climbing after the sentiment release the entire sector sold off. Today’s action highlights what you think may not necessarily happen. The price action as of late has been bearish, not bullish. Could the sector turn around after tomorrow’s release of Housing Starts and Building permits? The answer is yes, but given the evidence we have now it doesn’t seem likely. Stick with price and ignore the noise. There were plenty other leading stocks like XONE and SSYS who were hit today. It is not unusual to see leaders get hit, but when they begin to get hit all at once over a period of time it usually spells trouble for the overall market. Today was one day and we remain in an uptrend. Until there is sufficient evidence given to us from price we are going to stick to the long side. Maybe the top callers will be right here…or they won’t. Enjoy watching the fireworks go off courteous of the Fed Chief.

The Market hits the breaks Ends Lower

The morning did not get off to a great start with disappointing economic data hitting the market. Weak jobless claims and a Philadelphia Fed manufacturing index showed how disappointing the economy continues to be. By mid-day it appeared the market simply didn’t care too much about the weak economic data. Just as new highs were being reached sellers took to the market pushing the market to the lows of the session. While the market didn’t close on the lows there was certainly a feeling this could turn into something more sinister. One day doesn’t change the market and this uptrend remains in place. Last night we showed you how bullish the II survey respondents have become and today we got a read on the AAII and NAAIM. Neither survey was at an extreme in either direction. AAII survey bulls were less 40% and bears under 30%. NAAIM survey showed investment managers positioned bullishly at 84% with bears almost non-existent. Neutral appears to be the place to be in both surveys. Outside of the II survey there isn’t any evidence of exuberance from market participants. Now, CNBC guests are another story including their hosts. Stick with price. TSLA this morning offered a nice place for the second time in three days to take some profits. The stock may be topping in the near term. We certainly aren’t going to call a top in the stock, but after this kind of run it is prudent to lock in gains. No one knows where TSLA will end up in the long run, but how many cars have Consumer Reports given a 99 rating to? If you get a chance to see the Model S or Roadster they are good looking cars. There are a few Fed officials who have expressed the central bank will need to begin to taper its purchases of mortgage and treasury securities. Should they or shouldn’t they really isn’t much of a concern for us as we simply follow our pricing signals. Guessing on the direction of the market isn’t a sound strategy. Stick with Big Wave Trading to navigate the market waters. Have a great weekend.

A Last Minute Kick Save lifts the Markets off their Lows as USDJPY Pushes above 100

A better than expected jobless claims figure failed to inspire buyers to hold stocks in positive territory at the start of the game. A weak wholesale inventory report sent sellers rushing into the market only to be saved once again by the Fed’s Permanent Open Market Operations (POMO). Big earnings moves by GMCR and TSLA shined as shorts got their clocked cleaned. Both stocks have been in uptrends and have moved quite nicely recently. Some fireworks went off in the late afternoon as the NASDAQ dropped from its high of the day right to its lows. Rumors of an article surfaced, but the move came at a time where the USDJPY surpassed 100. A late day buying surge lifted the market off their lows avoiding a potentially negative close. Volume ended the day mixed with NYSE lower and the NASDAQ higher. A day of distribution was avoided, but given the amount of distribution during April this market can endure quite a bit of distribution. One could call the action on the NASDAQ stalling, but this type of action really hasn’t mattered. Distribution is simply being ignored with the Fed’s POMO going on fresh new cash continues to flood the equity market. It was about time this market finished the day lower. We have seen this market go straight up without much consolidation and today we did get it. It would have been ideal for the market not to head into positive territory only to see the gains evaporate. Given the QE and ZIRP environment is difficult to think or even try to rationalize as “normal.” It is best to stick to a rules based, emotionless trading system. Get in with Big Wave Trading. Perhaps the fed will taper their QE program in the latter half of 2013, but no one really knows. Most are asking what to do when the Fed does end QE, but perhaps another question should be how to invest if QE doesn’t end. Our approach answers both these questions. Join and get educated in driving for gains. Have a great weekend.

Stocks Advance as Volume Swells

The lone economic piece of data for the US was Mortgage Applications showing a 7% gain. Economic data will be light for the rest of the week excluding tomorrow initial jobless claims figure. Commodities pushed higher as gold and crude led the way higher. The dollar index fell on the day and still trying to find a way to move above its 50 day moving average. Earnings season continues to stroll and we continue to see positive action. Volume rose on the session giving us an odd feeling as we normal see volume tail off when the market rises. This uptrend remains intact and unflappable. You know it is a bull market when you have a stock like DDD offer up a secondary share offering and have the stock rally and close higher. A 3D printing stock is certainly a hot sector with tremendous long-term potential. Usually a secondary will sink a stock, but not for DDD. It would be nice for the stock to put in a handle for 3 weeks breaking out from a cup with handle chart pattern. One can dream and we’ll just stick to our trading rules. Today’s action in DDD certainly shows the strength of this market and the stock itself. The II sentiment survey is out showing a jump in both bulls and bears. Bears remain below 20% of survey respondents. Bulls on the other hand jumped back above 50% with 52.1% of respondents indicating they are bullish. Both bulls and bears are near extreme levels. However, neither are at extremes. Tomorrow we’ll get a read on the individual crowd from the AAII survey and the “pros” at NAAIM. AAII has been quite bearish and it will be interesting given the move in the market if they have pushed the bulls back in control. Today’s after-hours session certainly had fireworks. GMCR and TSLA responded well after reporting earnings. Both stocks have had nice runs and will look to add to those gains tomorrow. On the downside RAX continues to struggle with their earnings report. FIO had its co-founder and CEO leave sending the stock lower. We want to get after stocks rising in a good market and GMCR as well as TSLA are a great example of stocks moving in the right direction. Cut those losses and ride your winners.