Bernanke Presses on with QE, but Volume Drops as Stocks Close Higher

Another Federal Reserve meeting and the central bank vows to continue to print billions of dollars a month until the Unemployment rate drops to acceptable rates. Cyprus fears seem to die down as it appears Russia will protect its own and give a bailout to the small island nation. Banks will not reopen to next Tuesday, but the situation begs the question will the next EU country who needs a bailout and is not involved with Russian Oligarchs will be required to confiscate bank deposits? Philosophical question, but we digress. Price action continues to indicate this uptrend will continue higher. Volume was lower on the day despite the Fed’s Chief promise to keep the printing presses pumping liquidity. How high and how far we’ll go is anyone’s guess, but we’ll continue to operate in an uptrend. Two blemishes on the day were HPQ and FDX. These two stocks have been leading this market higher, but both today turned lower. HPQ appears to have run out of steam after doubling since its November lows. FDX earnings release disappointed the market. Falling more than 7 points on the highest volume since 2010 it blew through its 50 day moving average. FDX had been leading the Transports to new heights, but after today it places a blemish on the current uptrend. Perhaps a bigger earnings story is what happened to ORCL in after-hours trading. When all was said in down in the after-hours session the stock fell more than 7% from today’s close. The stock missed its earnings expectations and was punished. ORCL has been pushing higher and leading the NASDAQ higher along with GOOG. We’ll see how the stock reacts in tomorrow’s session, but the drop in after-hours is quite telling. Now with the Federal Reserve out of the way it will be interesting to see if the market can continue to remain elevated. Time will tell and price will guide our trading.

Stocks Stage Powerful Rally as Volume Swells

Mario Draghi and the ECB took center stage this morning announcing a new bond buying program. The ECB delivered on its rhetoric it would do all within its power to save the EURO. Stocks cheered the move and futures rallied. ADP employment figures came in better than expected as well as jobless claims. However, neither the ECB nor these economic reports got the market moving like the ISM non-Manufacturing index. Institutions stepped in a big way scooping up shares after the service sector expanded. Buying continued and the gains of the day were locked up with the market closing at its high of the day! A very bullish day and today is precisely the day we were looking for as a continuation of the summer uptrend. There are plenty of stories out there with all the hedge funds and other institutional players that are massively under invested. Headwinds like the fiscal cliff and European debt crisis have kept many market players from investing in this market. Missing out on today’s move is certainly going to set back many, but the problem really is having an opinion on the direction of the market. If you simply followed where price was telling you wouldn’t have missed out on the rally today. Ignore the headlines you read and follow the price action in the market. Sentiment has been mixed with neither side reaching an extreme level. This week’s reading from the AAII sentiment survey showed bulls and bears equal. The market has been consolidating its gains from the June lows and it is no surprise there was neither a bullish or bearish tint. However, it does showcase how many people missed the rally today. Now, will we see immediate follow-through from today’s action or do we see this rally fade? Until price tells us otherwise we are are going to push forward on the long side! We witnessed a very bullish day ahead of tomorrow’s job report. Unemployment is expected to hold steady at 8.3% and roughly 130,000 jobs added in the month of August. It would be nice to see the labor participation rate to expand and the unemployment rate to drop. That would be very nice. When all is said and done it is about price and we’ll act accordingly. Have a great weekend.

The Market Awaits the Jobs Reports as AAPL Moves Higher

There was a whole host of news for the market to digest this morning from the ECB rate cut to the Chinese cutting its rates. The ECB did not increase the size of its bailout mechanisms despite the cry for more. We did get somewhat good news with the ADP report showing 176,000 jobs were created in the month of June. Unfortunately, only 4,000 were manufacturing jobs. Jobless claims were better than expected, but failed to ignite any excitement over the employment picture. Another disappointing ISM release this time in the non-manufacturing space showed the service sector grew less than expected. While the NASDAQ was able to get off the lows of the session late day sellers knocked the index to close flat. This market awaits tomorrow’s jobs report and we remain in a buy signal. AAPL was a big part in the success of the NASDAQ Today jumping more than 10 points. News of a smaller iPad certainly helped buyers to jump back into the stock. Volume was above average today, but it was the first time since May 22nd did the stock experience above average volume. The recent move has been in light volume and while the gains have been nice there isn’t anything screaming about institutions buying this stock hand over fist. We won’t argue with the gains, but something to keep an eye on as this market moves forward. The lack of volume on the upside isn’t anything new for discussion, but an interesting development is with the AAII sentiment survey. Bears dropped 9 points, but it is the lack of convinction from either side that is interesting. Bulls and bears are at 33% a piece with 34% of respondents neutral. Traders are going the way of Switzerland and not chosing any sides. Trend followers do not care which side of the market we need to be on we just go there. However, the neutral bias continues to be a common theme with sentiment these days. This entire rally has been on the back of the Federal Reserve Bank coming up with a new bond buying program. Ben Bernanke was all over this question in his last question and answer session saying unemployment was a key indicator for him and the fed. Tomorrow’s unemployment figure, expected to be at 8.2% was the indicator Big Ben Bernanke is keeping an eye on. Tomorrow will be a fun day! Enjoy the weekend.