Stocks and Volume End Mixed as Consumer Confidence Dips

A positive Case-Shiller housing report was over-shadowed by a disappointing drop in consumer confidence. Volume ended mixed on the day, but did not trigger any distribution. The market appears to be waiting word from the Federal Reserve head Ben Bernanke on Friday. We did see support coming into the market just after the consumer confidence debacle, but we didn’t see the market follow-through on the buying. The final hour did see a push, but was quickly met with sellers. Summer trading continues and it will conclude with Bernanke’s presentation Friday. Tomorrow we’ll get another read on GDP and the market is expecting the economy grew at a 1.7% pace. My best guess is GDP figure comes in line with estimates and it won’t really matter to the market. Bernanke’s speech at this point is probably overshadowing any economic release including GDP. In the end it boils down to price and we’ll keep our attention to what matters most. It is a shame the United States can’t generate growth beyond 1.7%. We are a double digit trillion dollar economy and growing at a solid 4 or 5% clip would be difficult. The law of large numbers comes into play here, but it would be nice to get more growth out of this country. Remember Iceland and Estonia? Iceland didn’t bailout its banks, it prosecuted its bankers. Estonia cut spending and took its medicine, but is growing at a great clip. Perhaps we should take some notes on what works and implement that. There isn’t much else going on in this market until the big boys come back after Labor Day. NTE running again today and we’ll take a few more profits on this bad boy. A few other stocks continue to move higher, but we aren’t seeing any explosive moves. They will come back and we’ll be ready. The question is are you ready?

Fed Chief Does not Signal QE3, but the Market Disagrees

Despite a better than expected Housing Confidence Index it was all about the Fed Chief. Chuck Schumer said it best and it was what got the market off the lows. He basically stated that DC will not get its act together and the Federal Reserve must act. From that point forward the market moved off its lows as volume surged in the market. Regardless of your view at this point the market wants to move higher in the short term. Late day selling did put a cap on the day, but the overall gains in the market certainly paints a bullish tint. Until we get further selling, this market wants to move higher. The market clearly expects quantitative easing to help support it going forward. It is quite sad that this market needs the fed to print money to support this market. Earnings season has not been stellar and many stocks have missed their estimates. At this point, we cannot ignore the price action simply because we think the economy is in a tail spin. For now, this market wants to move higher and we’ll be moving along with it. Do not fight the trend. Ben Bernanke moves from the Senate to the House tomorrow where he’ll face even more questions from Congressmen/women. Unfortunately for Ben, he’ll like face the same lame questioning he received today. Majority of the questioning was grandstanding by both parties and did not ask any very pointed questions. Essentially, what we got today was Congress and the Senate will not do anything and they expect the Federal Reserve to print away their problems. Elected officials are terrible and Schumer pointed the problem out. The trend is your friend and do not forget it. Tomorrow may bring a change in trend, but for now this market wants to move higher on the high of quantitative easing…part III. Do not fight the trend no matter how much you believe you are right. This is precisely why we cut our losses. Ride the trend higher and get off when the trend reverses. Big Wave Trading is your guide.

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.