Industrials hit more Highs but Volume Drops again

For the 7th straight day the Dow Jones Industrial Average closed higher. Volume fell across the board, but this is normal for this uptrend and Mondays. VIX fell to new lows as buyers continue to show extreme complacency. AAPL reversed off its lows in the afternoon pushing the NASDAQ to new highs on rumors of a “plan” for their cash. The stock is so beaten up any rumor will force shorts to flee for the hills. The Yen and Pound continued their declines as both currencies appear to be racing towards zero. Although it appears the Yen will likely win this race. We aren’t surprised by new highs and we’ll continue to operate on the long side of the market. There weren’t too many negative signs in the market other than the extreme light volume. NYSE volume was extremely low and you have to wonder where the institutions are. Where did they go? KORS a leading stock dropped below its 50 day in high turnover. The stock has continued to struggle after reporting earnings. SLCA issued a secondary after the bell and this leading stock will need to prove it can absorb the excess supply. The Fed’s money printing has seemingly put a floor in the stock market and any downside will be limited. However, we know better and we will continue to work our process. Wednesday is a big day for the markets as we get a reading on February advance retail sales. Many have made a big deal over the pay roll tax increases. WMT stock price has ignored the internal memos regarding sales. TGT has broken into new highs despite consumers having to deal with higher taxes. It will be most interesting to see how the market reacts to the release. Friday’s job report was finally a good sign, but we’ll need to continue to see jobs created a large pace. Unfortunately with the Federal Reserve printing $85 billion a month and continuing ZIRP. At some point either the Fed or the market will stop QE and ZIRP. We need a healthy economy without endless money printing.

GOOG Soars past $800 Stocks Lift to New Highs on Light Trade

The market is able to shrug off a dip in homebuilder sentiment and move into new highs on the year. Small caps continue to lift despite ultra light volume in the IWM tracking ETF. Volume on the day was below Friday’s option inflated volume. NYSE composite came in second adding 73 basis points boosted by Oil and Gas sector followed by Utilities. High gas prices and higher payroll taxes appear, for now have yet to cause any impacts to consumer spending despite WMT internal memo leaked on Friday. Our uptrend remains and we are going to continue to stick to it until we see evidence to suggest we are going switch gears. Volatility continues to be compressed as this market continues to push to the upside. Fears of any shock in the market have subsided as we have yet to see any major hurdles arise. We have our exit strategy in place so we do not fear any move to the downside. However, it is interesting to see how much volatility has compressed since this market has pushed higher. There isn’t any fear out there. Whether that translates to further upside or not remains to be seen. We have our uptrend and are operating as such. Until we see distribution piling up and leading stocks breaking down then we’ll switch gears. Tomorrow we’ll get the FOMC meeting minutes. The central bank has its work cut out for it trying to navigate the QE waters. Ben Bernanke has committed to an accommodative monetary policy for the United States. The Fed has pumped trillions of dollars into the market and trying to exit this strategy will be extraordinary difficult. How do you remove an addict from its preferred drug without causing the maximum pain? Perhaps we should accept the pain as temporary? Very interesting to see how this all plays out. For us Trend Followers price action will dictate how we react. Distribution remains elusive and with the market continuing to make new highs without any institutional selling is not a recipe to sell. We’ll let the market come to us rather than predicting where it will go next. Short-term Trends TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/19/2013 153.25 0.75% IWM UPTREND NO CHANGE 2/19/2013 92.55 0.88% QQQ UPTREND NO CHANGE 2/19/2013 68.24 0.72% USO DOWNTREND NO CHANGE 2/19/2013 34.96 0.69% UNG DOWNTREND NO CHANGE 2/19/2013 18.30 2.92% GLD DOWNTREND NO CHANGE 2/19/2013 155.33 -0.28% SLV DOWNTREND NO CHANGE 2/19/2013 28.44 -1.35% DBC UPTREND NO CHANGE 2/19/2013 28.24 -0.39% FXY DOWNTREND NO CHANGE 2/19/2013 104.77 -0.02% FXE DOWNTREND NO CHANGE 2/19/2013 132.81 0.19% TLT DOWNTREND NO CHANGE 2/19/2013 116.5 -0.50%

Stocks Have a Wild Ride Close Lower

Earnings season has not been kind to stocks and it kicked started the market to the downside. Europe’s markets were selling off as the EURUSD fell below 1.22. Selling was intense, but backed off as buyers stepped up. The NASDAQ sliced through its 50 day moving average while the S&P 500 was able to hold above its 50 day. Volume rose on the day across the board as another distribution day is added. The last 15 minutes of the session was met with sellers trimming a good portion of gains seen since the morning lows. Today’s action was not terribly bullish despite coming off the lows. We remain cautious here. Stocks like PG and WMT were helping out the Dow Jones Industrial Average move higher. The Dow was the index holding up best today is a key sign investors were moving in a defensive manner. We do not believe a market lead by the Dow will be one that produces a strong move to the upside. Our leading stocks continue to look weak and are not inspiring much confidence in this market. We’ll stick to our rules and await our signals. Interesting headlines hitting the wires tonight with Italy being downgraded two notches by Moody’s and China’s GDP growth figure. Italy’s news is not really surprising to me, but I’d argue its rating should be junk. Remember when most investors were duped into thinking the Greek’s would meet their obligations? When all is said and done Greece is likely to have all its debt liquidated leaving bond holders high and dry. Will Italy and Spain be any different? Certainly just as big will be whether or not China is slowing more rapidly. Then again, can you trust what it prints for GDP growth? Too much speculation to gamble money on, but is an interesting intellectual debate. Remember leave the investing to a rules-based system rather than an opinion! If I had to guess tomorrow we’ll see stocks climb higher and close in the green. Then we can get headlines into the week the indexes snapping its losing streak. Investing based upon this would simply be gambling. Trade your plan and leave out the guess work. Have a great weekend and get out there and enjoy life.