Stocks Pull back as Volume Rises on the NASDAQ

European markets were dealt with poor flash PMI data with France flashing a very weak PMI figure. Futures were set to open lower ahead of the 830 data release. Despite a better than expected Jobless claims figure and inline housing price index futures simply couldn’t muster the buying power. Sellers took hold of the market just after the release of the better than expected Philly Fed survey pushing the market to the lows of the session. Like a broken record as the Feds POMO began the market found its footing and rallied until the close of POMO. It is quite uncanny how POMO keeps this market afloat. Sellers had one more shot to send the market lower and did so just before 2pm rolled around. However, the support at the 2pm lows wasn’t able to keep the market from closing above the mid point of the day. The NASDAQ did notch a distribution day bumping its count up to 4 days. We remain in an uptrend, but the caution flag has been raised. Cyprus continues to be a thorn in the side of the market here. It may just be an excuse for pundits to use as this rally has gotten long in the tooth. However, we are seeing disappointing earnings from the likes of FDX and ORCL suggesting the economy may not be what people think. Both these stocks were acting well up until their most recent earnings report. Coupled with distribution piling up is something we are keeping an eye on. Mind you, we aren’t trying to anticipate a turn, but preparing to take the signals in whatever direction. Sentiment remains tilted towards the bulls, but we aren’t at extreme levels we saw back in February. AAII bulls came in at 39% and bears at 33%. AAII is a volatile survey and a stiff breeze will shift sentiment. II survey saw bears drop to 18.6% from 18.8% and Bulls drop to 47%. Again, bulls aren’t at extreme levels while bears are nearing an extreme. Sentiment is by far a perfect science, but an interesting talking point. Sentiment like overbought/sold conditions can remain for long periods of time. The market does feel like it is heavy and will correct here. Unfortunately for those who try to predict these moves were wrong last month when the market looked like it was about to correct. Anything is possible and sticking with trend following will reap the greatest returns over the long term. Have a great weekend and best of luck on your March Madness bracket!

Dow Winning Streak Continues as Volume Expands

Once again the Dow was able to close higher as volume jumped on the day. It was nice to see volume expand above Wednesday’s level. However, volume remained well below its 50 day volume average. We can’t have everything. Jobless claims fell less than expected a sign perhaps the labor market is improving or there just aren’t that many people working to sustain a high level of job losses. Producers prices came in as expected. It appears we have carbon copies of intraday action with this market. We near lows of the session around 2pm EST only to find buyers pushing us back to the highs of the session. Sellers simply cannot find any footing to sustain any pressure. Thus, we have a lack of fear as seen with the VIX hitting another 6 year low. More gains in our uptrend and we aren’t about to argue with the market. Sentiment has swung back in the favor of the bulls with every sentiment survey showing a healthy amount of bullishness. While we do have quite a bit of bullishness we aren’t at extremes. One extreme we are at is with the II survey showing bears at 52 weeks lows. The reading of 18.8% hasn’t been seen in quite some time. AAII bears register at 32%, but the individuals in this survey typically flip flop and is difficult to get a solid reading of sentiment. On the other hand, the II survey of professionals tends to be a bit more smooth and reliable. NAAIM survey showed the positioning of its members fell a bit, but still well in the bull camp. We aren’t in extreme territory for the bulls, but with II bears in an extreme territory may at the very least signal a short-term top is nearing. We simply cannot know whether or not today was the high of the year. There are plenty of signs this market can still go higher despite the risks involved with endless QE. Inflation, so far remains tame and we’ll get a reading of CPI tomorrow prior to the market open. If you have gone to the gas station and/or grocery store you know prices have been steadily rising. However, I doubt these price increases make their way into the figure tomorrow. The government uses techniques to distort the truth in the inflation figures. Any hints at a possible early end to the Federal Reserve’s QErever plan may scare the markets. Anything is possible and if you follow price and leading stocks your trading results will be just fine! Make it a great weekend and as always cut your losses short.

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a strong BUY signal from 1/2/13. There remains absolutely zero indications, via price action, that there is anything to do but ride the trend higher here. Despite the constant discussions of what is wrong with this rally and how extreme it is (we will go over that below), stocks continue to breakout from solid consolidation patterns with other stocks either trending up since breaking out or consolidating in preparation for possible breakouts. As long as we continue to see high quality stocks setup, consolidate, and breakout, we will remain buyers, despite the “overbought” conditions of the market. And trust me we are extremely aware about them at Big Wave Trading. While we remain buyers of stocks “up here,” we are being very selective and using appropriate capital for a market so extended. If we had more of our current holdings looking like they were putting in climax or parabolic type runs we would be more worried and would begin to hunt for protective put positions in the indexes. However, our longs continue to act orderly and do not exhibit the patterns seen at a market that is doomed to soon top. It still very well could but the price action in the market and stocks does not suggest that. We read all the headlines. We see all the news. For instance, 3-month sum mutual fund and ETF inflows are at 10 year highs, weekly mutual fund inflows are at 13 year highs, mutual funds have the least amount of cash on hand in 50 years, the VIX is too low at 13, the bulls are dominating the bears on the II (55 vs. 21) and AAII (43 vs. 30) surveys, and stocks are overbought on short-term oscillating indicators. That is all fine and well and we definitely take all bit of information into consideration as we prepare for the inevitable pullback. However, until it actually happens, there is no reason to take defensive measures now by selling stocks or eliminating new long positions. Imagine not buying the gap up in LNKD on Friday because you thought the market was too high. It clearly didn’t care what you thought and proceeded to move higher throughout the session. Therefore, until we get our 3-5 churning or distribution days in the market over a period of 2-4 weeks, we will continue to take long signals but keep the new positions relative to the overall safety of their pattern and the continuation of the overbought market. When the tide changes, we will take our profits when our signals are triggered and will add some protective put positions. Until then, the trend has been our friend throughout 2013 so far and until that changes it is wise to remain its friend. It will change. That you can be sure of. As of Friday, however, it is still up across all major market averages. Have a great rest of your weekend everyone. I wish you a very profitable upcoming week. Aloha from a very warm and sunny Maui. TOP CURRENT HOLDINGS – PERCENT RETURN – DATE OF SIGNAL CSU long – 70% – 9/4/12 CAMP long – 66% – 4/26/12 HEES long – 65% – 9/4/12 FLT long – 48% – 9/6/12 EAC long – 43% – 12/17/12 VRNM short – 43% – 4/10/12 POWR long – 39% – 12/11/12 ASTM short – 32% – 7/17/12 MNTX long – 31% – 1/17/13 AXLL long – 29% – 1/4/13 CPSS long – 25% – 1/31/13

AAPL Drives Stocks Higher at the Close as Volume Slips

The Bank of England and European Central Bank kicked off the day with holding their rates steady. Neither rate announcement spurred much movement the reaction by the EURO certainly kicked off selling in the US markets sending the US markets to their lows of the session. Selling intensified throughout the morning as the EURUSD dove. Buyers were able to step into the market and were able to push the market back to the mid-point of the session. AAPL at the closed pushed the market back to opening prices as the company announced a review of its cash position. Volume ended lower on the session despite the buying at mid-day and AAPLs late day push. We remain in an uptrend and despite what you may see intra-day we’ll remain disciplined. AAPL has been quite the stock since the lows of 2009. It has been blamed for holding back the NASDAQ from hitting new highs. However, today it single handedly lifted the NASDAQ from its lows. Even in the last 15 minutes of the session it appeared the NASDAQ was ready to head back to the lows of the day when news hit regarding AAPL’s review of its cash. The stock did go ex today with its current dividend and with the news today it wouldn’t surprise me if a combination of a buyback and special dividend will be announced. Sentiment continues to run high amongst the bull camp. AAII bull respondents did slip from 48 to 43 with bears jumping to 29%. II Bulls hit the week at 55% (59% 5 year high) and bears coming in the week at 21% (16% 5 year low). NAAIM investment manager survey saw leverage come off the books to 95% long. Sentiment remains high here, but it can remain high for quite some time. Our uptrend remains in place and we have yet to see any major days of distribution. The same cannot be said for a few European indexes. The DAX, FTSE MIB, and IBEX all are below their 50 day moving averages with big time distribution. Europe may be cracking, but the US appears to be holding steady. Until we get signals of a market correction we’ll remain long. TICKER ST TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/7/2013 150.96 -0.13% IWM UPTREND NO CHANGE 2/7/2013 90.16 -0.33% QQQ UPTREND NO CHANGE 2/7/2013 67.30 0.09% USO UPTREND NO CHANGE 2/7/2013 34.68 -1.03% UNG DOWNTREND NO CHANGE 2/7/2013 18.54 -4.24% GLD DOWNTREND NO CHANGE 2/7/2013 161.84 -0.34% SLV DOWNTREND CHANGE 2/7/2013 30.46 -1.14% DBC UPTREND NO CHANGE 2/7/2013 28.44 -0.39% FXY DOWNTREND NO CHANGE 2/7/2013 104.71 -0.13% FXE UPTREND NO CHANGE 2/7/2013 132.92 -0.90% TLT DOWNTREND NO CHANGE 2/7/2013 116.93 -0.22% SLV changed trend today. Yes central banks have their printing presses in hyper drive, but we’ll follow our trend following signals.

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under BUY signals across the board. There is nothing still to do or think too much about as the trend higher is smooth and has come under very little pressure minus two minor distribution days in the Nasdaq Composite. Overall, many traders believe that it is time for us to take a rest or pullback. However, traders have been thinking this for a while and until it actually happens trading on that notion is not wise. On the sentiment front, it is getting very bullish out there for sure. However, nobody said it can’t get more bullish. Who is to say that bulls can not hit 90% on the Investors Intelligence survey? Who is to say it can not hit 90% on the AAII survey? Who is to say that the VIX can’t trade below 5 or hell even below 1? I know that is quite irrational but nothing about what has happened since 2008 has been rational. There is no need to believe it is time to start now. We would love to see a pullback here as it would most likely lead to a very nice consolidation period in many leading stocks that would make their upcoming next round of breakouts that much more powerful. Our biggest concern with a non-stop uptrend is the possibility of a hard reversal that might lead to a sustained downturn instead of a buying opportunity. However, that being said, it is all talking points at this juncture. All that matters is price, and sometimes volume (though it hasn’t mattered since 2009), and that is what we will continue to focus on. Set buy stops on your favorite stocks nearing breakouts to make sure you get long at the exact pivot points and you will do fine. If you wait till the EOD to buy breakouts in this market environment, you greatly increase your chances of getting caught in a normal shakeout/pullback in the stock. Great luck next week everyone. I wish you all a very prosperous week. Aloha. Top Current Holdings – Percent Return – Date of Signal CSU long – 71% – 9/4/12 HEES long – 64% – 9/4/12 CAMP long – 48% – 4/26/12 VRNM short – 48% – 4/10/12 FLT long – 35% – 9/6/12 ASTM short – 35% – 7/17/12 GNMK long – 30% – 11/16/12 POWR long – 29% – 12/11/12 EAC long – 27% – 12/17/12 HIMX long – 26% – 12/19/12

AAPL weighs on the NASDAQ as the S&P 500 Closes in the Green for the 6th day in a Row

AAPL was the talk of the street as the stock took a plunge on fourth quarter earnings. Initial jobless claims came in better than expected helping out on the job front (we’ll forget the surging number of people receiving food stamps and long-term disability). The market appeared poised to continue much higher with the market shaking off AAPL’s move. Just before noon time the NASDAQ had almost erased all of the day’s losses but sellers took over. Sellers dominated into the 2:00 pm EST hour when so when the VIX began to fall back helping the market come off the lows. NYSE and NASDAQ volume were higher giving the NASDAQ a day of distribution and a stall day for the S&P 500. We still have our uptrend and a rest here would make sense. However if this were to turn more sinister we have our exit plan. Gold and silver took a big hit today while other commodities were able to hold up. Gold and silver have yet to push higher despite the Federal’s Reserve’s desire to print $85 billion a month without an expiration date. Perhaps the medals know something about next week’s Fed meeting that the other market don’t. For now, both remain in their short-term uptrends despite their action today. Sentiment is at extremes with many surveys at multi-year highs. The AAII survey showed bulls at 53% highest since last February. Hulbert’s Financial Digest reading is at a level not seen since 2000. While this may be an indication upside may be limited we simply cannot trade off of it. The market may very well turn over here and head lower, but it is anyone’s guess and why we have sell rules in place. Stick to your game plan and execute. Short-term ETF Trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 1/24/2013 149.41 0.03% IWM UPTREND NO CHANGE 1/24/2013 66.66 -1.38% USO UPTREND NO CHANGE 1/24/2013 34.76 0.43% UNG UPTREND NO CHANGE 1/24/2013 19.53 -2.35% GLD UPTREND NO CHANGE 1/24/2013 161.42 -1.10% SLV UPTREND NO CHANGE 1/24/2013 30.65 -1.73% DBC UPTREND NO CHANGE 1/24/2013 28.07 -0.07% FXY DOWNTREND NO CHANGE 1/24/2013 108.66 -1.69% FXE UPTREND NO CHANGE 1/24/2013 132.7 0.41% TLT UPTREND CHANGE 1/24/2013 120.09 -0.35% TLT signals a change in trend from downtrend to uptrend. Have a great weekend.

Dollar Falls and Stocks Shake-off Intraday Sell-Off

Shaking off a late morning sell-off the market was able to rebound closing near the highs of the session as volume pushed higher on the NYSE, but flat on the NASDAQ. The EURO raced higher after comments from the ECB rate announcement pushing down the dollar index. AAPL was the catalyst for both moves in the morning and late afternoon as the stock continues to move sideways after its most recent decline. The NASDAQ and Small Caps hit new highs for the uptrend a good sign for the market in the short-term at least. Our uptrend continues to play out and barring any price destruction should continue on its merry way. Gold and silver rebounded today after their most recent sell-off. Despite the Federal Reserve signaling a possible end to QE forever the metals have been able to rebound somewhat. Crude oil once again moved higher while the rest of the commodity space remained relatively flat. The inflation trade in stocks and commodities still lives. Sentiment has crept back to lofty levels for the market, but not at the highs previously seen. The AAII bull sentiment figure jumped to 46.45. This past year the high for the index hit 51.64 back in February of 2012. The market was still able to rally higher and set a new high for the rally showing sentiment is not a reliable indicator for the market. Bears came in at 26.92 well above the 52 week low of 17.18 set back January of last year. Neither sentiment readings are at extremes, but we are close. The Investors Intelligence survey showed bulls back above 50% at 51%, but no near the high of 58% set earlier. Given the recent action and the lack of ultra-bullishness it appears this market has some room to run. Tomorrow we’ll get a reading on prices on imports and exports followed by the Treasury Budget announcement at 2pm. The deficit is expected to come in at -1 billion dollars. Many took income in the month of January rather than in 2013 due to the fiscal cliff. It will be interesting to see how much money the Treasury will be able to net. I’d think the estimates are off and likely sway when the debt ceiling debate would begin. We can only speculate at this point, but something to keep an eye on. As we ride into the weekend, we expect to see this market hit new highs and stand ready to act as necessary. Cut those losses.

GDP Prints above 3% as Stocks Trade in Tight Daily Range

In a surprise event 3rd quarter GDP printed above 3% above expectations. Unfortunately, the surprise to the upside failed to induce a strong response from the stock market. Initial jobless claims rose to 361,000 for the week a bit higher than expected. But, dominating the headlines was John Boehner’s plan B for the Fiscal Cliff. Volume ran lower throughout the day suggesting institutions were taking a break. Leading stocks help up relatively well while ISRG and HLF continued their declines. Financials and in particular BAC continued to march higher with Small Caps continuing their run. At the close, stocks closed near the highs of the day finishing much better than Wednesday session. Our uptrend remains intact and we’ll see how stocks react to tomorrow’s quadruple witching. News hit John Boehner pulled the vote on his Plan B sent futures MUCH lower. The Emini-S&P 500 futures dropped more than 2% in 2 seconds. The only way this occurs is with computers fighting one another. The low print was 1391 nearly a 50 point decline in the S&P 500. We aren’t about to react to the moves in after-hours session and we’ll see how we open/finish tomorrow. If we move lower and hit our exits we’ll gladly do so. For now, we’ll remain with our positions and react as our rules say we should react. There are positives in this market with small cap stocks leading the market higher. Barring a disaster tomorrow this uptrend should continue to move higher. We do have plenty of bulls in the market with the AAII Survey showing more than 46% of its respondents say they are bullish. Only 24% responded as being bearish over the next 6 months. While the percentage of bulls is not at highs it is nearing frothy levels. Remember, sentiment is far from a perfect indicator for the market. However, for the fourth straight week we have the number of bulls above 40%. Tomorrow will be fun with options in four different markets expire. Volume should soar tomorrow skewing our volume data. Price action will be pivotal given the reaction to the cancelling of the Plan B vote. There is no need to have guess work here. Stick to your plan and execute with precision. Have a great weekend and despite what many are predicting for 12/21/2012 we’ll see you next week.

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio continues to be under a BUY signal that was generated on August 3rd. The past week was another overall solid week with solid intraday price action outside of Friday. Another positive was the Nasdaq having two up sessions on volume well above average, continuing the trend from the previous week. We continue to believe that this uptrend can last longer based on the overall public (AAII Survey bulls: 37.5%) still not showing that bullish fever and the NYSE short interest ratio sitting around 5-year highs at 21.03. As long as the trend is up, the public is not overly bullish, and the short interest ratio remains high, the trend should continue to be our friend. We know what to look for if that changes but so far we have absolutely no signs of a change in trend coming. In fact the last distribution day on the Nasdaq was on August 21st (according to Telechart’s data). That is one month without a distribution day. Clearly, for now, there is nothing to worry about. We will cross that bridge when we get there. As for stocks, we continue to find a ton of attractive long positions and continue to see many others setting up. If this continues, it bodes well for the continuation of the rally. Despite some trading sessions the past week being quite boring, there were plenty of stocks that made exciting dynamic price moves higher. Seeing these stocks move like they are on quiet days is a clear sign of real accumulation. The only bad news, so far, in this rally is that we have not had a single stock set up in a “perfect” setup. However, that isn’t surprising as beautiful green filled chart patterns have been in decline since the 2008 crash. Trend following is definitely where it is at. Playing hot charts is not. I am sure one day that will change but as of right now it has not. We’ll keep hunting. Have a lovely rest of your weekend and aloha. Top Current Holdings – Percent Return – Date of Signal AVD long – 141% – 1/10/12 SVNT long – 70% – 9/10/12 NTE long – 65% – 8/17/12 CLGX long – 58% – 6/19/12 SHF long – 36% – 8/1/12 CAMP long – 33% – 4/26/12 PRXI short – 32% – 3/30/12 MAGS short – 30% – 4/18/12 VRNM short – 30% – 4/10/12 STX long – 25% – 6/29/12

Volume Ends Lower as Stocks Close off the Lows

The week of consolidation continues as debate over whether or not this market can go higher rages on. Overnight China’s flash PMI disappointed showing the country continues to slow significantly. China’s disappointment sent futures lower across the board. US economic data continues to be uninspiring as jobless claims remain high. Buyers did step up at the end of the day putting a bullish tint on the day. Volume ended the day lower across the board as the NASDAQ escaped a day of distribution. Week’s like this one will certainly shake the confidence of those who are long the market. Our uptrend remains and we’ll remain long this market until price tells us otherwise. For those who simply follow price do not concern themselves with whether or not a trend is over. At the moment we have plenty of folks including Elliot Wavers citing extreme bullishness as a reason the market is about to head lower. Hey, they could be right. No one knows the future and the way the market is acting says the uptrend remains intact. Tomorrow may change and those calling for a correction may be right, but what if they are not? What happens then? We follow price action of our stocks and the market. Everything else is noise. The one sentiment survey I do talk about here is the AAII survey. At the moment the split between bulls and bears is 38% to 34%. Both figures remain at extremes and this survey was done earlier in the week. As the market heads sideways are those who are bullish going to remain so? We can come up with an infinite about of scenarios and guesswork on what may or may not happen. Guess what, it doesn’t matter! Football season is in full swing and we’ll have another fun filled weekend after tomorrow’s option expiry. After a long week of consolidation tomorrow will be interesting to watch. Have a great weekend!

Stocks Slide as Volume Slips

Jobless claims and New Home sales disappointed setting a negative tone for the entire trading day. Federal Reserve President Bullard did not confirm a new quantitative easing program, but gold and silver still jumped higher. The two precious metals are certainly trading like there will be another easing program. Buyers did try to get the market higher before the lunch hour, but they did not have enough ammo to push the market back into positive territory. Tuesday’s high remains a road block for this market we have moved lower on lighter volume. Today was a consolidation day, but it is time for institutions to step up and support this market. The continued move in the precious metals has been quite impressive. What it all means is really anyone’s guess. An educated guess would be the metals are moving because of a new easing program. What about a lack of confidence in the US Dollar? ECB bond buying? We can certainly make up plenty of different reasons for the move. However, are you busy worried about the why rather than just getting aboard and taking advantage of the run? The “why” always comes, but we aren’t about to wait and waste an opportunity for gains. Sentiment has shifted to be in the bulls camp. AAII survey showed the amount of bulls jump to 42% the highest for this recent uptrend. Bears slipped to 26%, but many remain on the sidelines. 42% is not at an extreme level and anything above 48% would be considered extreme. 26% is low, but for bears anything around 20% would be too considered extreme. Current sentiment really only highlights the neutral nature of the survey respondents. This weekend will be the last weekend before the office end of the summer season. Make sure you get out there and enjoy the last of summer. Remember, know your entries, position size, and your exits.

Stocks Take a Step Back in Quiet Session

For the 9th Monday in a row the market closes lower on very light volume. After Thursday and Friday’s trading sessions today’s pullback is a welcomed sign and a very bullish one. The Russell 2000 led the decline with the NASDAQ not far behind with losses of .56% and .41% respectively. The key point here was volume did not accelerate with the selling and dried up on the day. Institutions were not dumping stock today and for now a good sign heading into a fun filled central bank week. Wednesday the Federal Reserve kicks off the news week with their rate announcement in the afternoon. Tuesday we have a few economic releases, but the focus will be on Wednesday and would expect another day similar to what we saw from the market today. I am not trying to predict what will happen tomorrow, but merely pointing out volatility kicks in after rate announcements. We’ll be focused on the price action of our stocks rather than guessing where we may go from here. Sentiment continues to be quite negative. AAII Bulls have dominated the survey has of late and II bulls continue to disappear. Any interesting poll came across CNBC today and one that asked if the current rally was going to continue. 71% of respondents thought it was going to be short-lived and we’d head lower. Mind you this is CNBC whose job is to pump stocks and it was quite astonishing their viewers are that bearish. Is it that the investing public is too bearish on this market? Time will tell and so will prices. Today was much of a do nothing day. A very boring day, but one that was a good step forward for our buy signal.

Its Quantitative Easing or Bust

It is quite clear the market is waiting for the world’s central banks to print more money. Futures were heading lower along with European markets when the ECB’s Draghi issued comments about saving the EURO at all costs. Translation: they will print EUROs. The stock market’s reaction to Draghi’s comments were positive as price gains were strong on above average volume. End of day action wasn’t ideal and the S&P 500 was the only index to look ideal. However, what a difference rumors of quantitative easing will do for the market. There isn’t something quite right with this market, but with the hint of further easing the market will continue to trade wide and loose. Earnings season has not been kind as we are on pace for a very disappointing earnings season. While we are very price driven we focus on growth stocks. Unfortunately, without growth in fundamentals our universe of stocks shrink and this is the current situation we are in. The lack of growth in the market on the fundamental level has us seeing a narrowing universe of stocks. Not to mention this earning season has destroyed a few of our leading growth names. We can always hope the miracle of quantitative easing will save our stocks and set off another rip roaring rally. The AAII survey continues to lean towards the bearish side of things. It is easy to see as why the folks answering the survey are bearish. Earnings season is not spectacular and economic news has NOT been good. June’s PMI were very negative and recent home sales both pending and new have been disappointing. Manufacturing data has not been signaling growth, but contraction. Outside of quantitative easing there isn’t much to be bullish on. The next FOMC meeting is next week and on Wednesday they will release their policy statement and rate decision. We’ll focus on price and follow our rules while the rest use discretion and opinions to navigate this market. Tomorrow’s GDP report will set off fireworks for the market. Sit back and enjoy the ride! Have a great weekend.

NASDAQ 100 Carries the Market Higher Despite Disappointing Manufacturing Data and Jobless Claims

Economic news was not good this morning, with the Philly Fed showing manufacturing contracting and jobless claims contracting much more than expected. Initially the market did sell off on the news but buyers jumped back into the market pushing the NASDAQ back to intraday highs just after noon time. Early afternoon selling, once again, was met by buyers as this market appears it just can’t go down. Regardless of the reason we continue to see support rush into the market any time sellers get a leg up. A few financials were struggling, but overall the market remains in an uptrend and we’ll continue to act accordingly. A surprise out of the AAII investor survey was it showing the number of bears jumping above 40%! Those who are bullish fell to 22% and it is surprising considering the move in stocks since JPM issued earnings. Sentiment is not something you would want to trade off of, but it is interesting where folks are at with this market. Perhaps it shows people are bearish and feel the Federal Reserve will save the market. The big boy financials certainly aren’t following up gains from earnings. MS reported this morning and the stock has been getting hammered. BAC, JPM, and GS continue to act very weak! Technology stocks are certainly in favor with EBAY, QCOR, and SNDK earnings. Last week it was JPM who got the party started with its earnings release and we have seen very little follow-through. We’ll stand pat with our rules-based investing and leave the guess work to others. Lagging the broader market in a significant way were Small Cap stocks. The Russell 2000 fell .36% today, while the NASDAQ jumped .79%. Even though the NASDAQ backed off its highs of the day, the index put in a solid day, unlike small cap stocks. It is unfortunate, but investors are just not favoring small cap stocks for whatever reason. Perhaps the Bernanke put is only dividend yielding stocks? It is anyone’s guess and for now small cap stocks as a group are not moving and we’ll latch onto the stocks that are moving. Just another day in paradise! Cut your losses and let your winners ride! 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.

Rumors of Central Banks Moving to Provide Liquidity Help Lift Stocks

Good news for consumers as CPI dropped, but a worse than expected jobless claims figures continues to show the weakness in the job market. The big story of the day was rumors of a joint strike by central bankers to provide liquidity to the market. Money printing operations has already pumped over $6 trillion into the market and we continue to see the need for more. Stocks did get a big boost, but failed to retake Wednesday’s high. Volume jumped on the NYSE and NASDAQ, but it continues to be very light and below average. Not too many institutions were out buying the rumor over further easing. The market continues to search for direction on day 9 of this attempted rally. Tomorrow we get quadruple witching Friday and you can bet volume will be explosive during the early going. The market will certainly be adjusting to where traders want to be positioned for the Greek elections on Father’s day. A secret “poll” was released in Greece sending Greek stocks higher ahead of this weekend’s elections, but does it even matter? Given the Spailout the Greek’s will want similar terms and then what? Can Italy borrow even more at 7% while only collecting 3%? Is piling more debt on top of debt going to work this time? This is precisely why following price and not guessing where the market will be is much more efficient way of producing superior gains from the market. Sentiment this week tipped the scales back to neutral with bears falling to 36% while bulls jumped to 34%. Neutral market participants continue to be the main driving force of sentiment. Respondents are simply not willing to step in either direction, something we haven’t seen from the market in a long time. The next major move will certainly be powerful with the number of neutral market participants remain very elevated. Happy Father’s day to those dads out there who do their job! Get out and enjoy the weekend and life!

Stocks Limp Into Month End After a Poor Showing for the Month of May

End of the month volume poured into the market at the close, but failed to end stocks at the highs of the session. GDP came in line as expected, but at a paltry 1.9% far from where this economy needs to be at for a sustainable recovery. Sellers had dominated majority of the session and for obvious reasons. The rumor mill continues to swirl as Europe tries to figure out a way to sort its mess. Bond yields slid to their lowest levels as US Treasuries continue to be a safe haven among investors. Stocks did find their footing by the end of the day, but the rally left a lot to be desired. Sentiment week over week tilted towards the bears this time around. AAII Bulls dropped from 30% to 28% and bears jumped back over 40% to 42% from 38% last week. The story with the Investors Intelligence survey isn’t the number of bulls or bears, but the number of folks who are neutral. Short-interest remains near 5 year highs despite the lack of bears in the market. A very interesting development nonetheless and something we’ll continue to keep an eye on. Tomorrow we’ll get May’s job figure and unemployment figure from the government. Economic news has been disappointing as of late and it is hard to think employment numbers will be any different. However, the government can manipulate the numbers so anything is possible. More importantly will come the reaction to the numbers and the price and volume action for the remainder of the day. We can have all the opinions in the world that sound logical and “right,” but at the end of the day only price matters. We need to be focused on what matters: price. Enjoy the weekend coming up and make sure you get out and enjoy life a bit!

The Dow and Russell 2000 Close Positive as the NASDAQ 100 Limps into the Close

Economic news was mixed with a disappointing durable goods figure and a better than expected Kansas City Fed Manufacturing reading. The dollar rose again as the European situation continues to act as an annoyance to the market. Europeans cannot get their act together and we continue to suffer having to see it used an excuse for bad execution. Volume dropped on the day and below average showing institutions weren’t dumping stock. We have seen the market gain support at the lows in back to back sessions as a sign buyers are willing to step in. Today was day 4 of an attempted rally and we’ll be looking for a follow-through day soon if this rally has any legs. The number of AAII bulls jumped back above 30% since it hit lows last week. Bears dropped below 40%, but held just at 38%. Sentiment remains bearish, but well off the extreme levels we saw last week. The Investors Intelligence survey didn’t move much, but tilted towards the bears. Sentiment is by far from the holy grail of investing indicators, but it does help at extreme points. Last week we saw a market massively oversold and sentiment heavily skewed towards the bears. For now, we have lifted these conditions and move forward. Cloud computing stocks took it on the chin after NTAP reported earnings. The stock got hammered and two other names FFIV and VMW were handed heavy losses as well. These moves along with DELL held back the NASDAQ. FFIV may have found support at its 200 day but cloud stocks have not been the leaders like they were in October of 2010. Former leaders tend to be the best shorts and if any of these stocks give us the signal we’ll jump aboard. This market still remains in a precarious position. The S&P 500 and NASDAQ have put in a lower high (end of April) and a lower low here in May. We are in a down trending market. Remember, in the fourth year of a bull market on average a 9 month bear market occurs. Given the lower high and lower low we could be in the midst of the 9 month bear market. Anything is possible and we’ll stick by our disciplined trading no matter what the market has in store for us. Have a great memorial day weekend!

AAPL Falls as Buyers Continue to Stay Away from the Market

Disappointing Philadelphia Fed and jobless claims figures help set a negative tone for the day. Europe continues to dominate the fear index and FB continues to dominate CNBC’s content lineup. The true story of the day was at the end of the day with sellers taking it to the market. AAPL was a large part of the NASDAQ decline of 2.1%. The market is now in a real danger zone with the lack of buyers willing to step up could make it very difficult for this market to regain its footing. Big Wave Trading continues to operate under a sell signal and we continue to look for this market to continue lower. Sentiment continues to be negative, but the Investors Intelligence survey continues to lack the negative bearish sentiment. AAII survey certainly saw bears jump in terms of percentage and its bull ratio near lows, but the lack of bears responding to the II survey is somewhat concerning if you are bullish. The NASDAQ has corrected roughly 10% from its March highs which should be ushering in a bearish view point. However, we continue to see the neutral camp dominate the II survey. Given our current situation nothing that happens from here on out will not surprise us. FB will be an entertaining IPO and will likely be a wild ride given the current market situation. We are oversold and a bounce would not be out of the ordinary for a quick snap rally to occur. Tomorrow’s options expiry will certainly provide the morning with fireworks. The oversold nature of this market tomorrow would be as good of a time as any for this market to push higher to work off the current oversold conditions. Cash is king here and we are looking forward to the weekend. Get out and enjoy the weekend!

Second Day of Solid Gains Pushing Market Model Back to Buy

Another great day of stock market gains despite AAPL taking a back seat consolidating its gains from Wednesday’s market. Volume ended mixed, higher on the NASDAQ for the second straight day showing institutions are scooping up shares on the NASDAQ. The buying spree didn’t begin until the end of the day, but it came on strong and showed there might be some life left to this market. Economic news wasn’t great while jobless claims continue to be weak and is not a great sign for the job market. Just a solid day in the market and it was AAPL getting the ball rolling. Sentiment took a dive this week as the number of bulls dropped considerably across the board to lows not seen for quite some time. It appears the crowd bought into the bearish talk out of Europe. Bears jumped on the AAII survey to the most since this uptrend began last year. Sentiment is not a perfect indicator, but it does appear sentiment got a bit overzealous to the downside. There were plenty of breakouts today and some by solid growth companies. Everyone knows AAPL story, but a few other big names had some really nice gains. We love to see this when a market is about to rebound or start a new uptrend. A real positive is the NASDAQ getting big time support above its 50 day moving average. The combination of leaders and support above the 50 day could be setting this market to hit new highs. Nothing is for certain, but the odds are beginning to stack up in the favor of the bulls. We aren’t going to sit here and argue with the market. It would not be a prudent move to let this market go ahead without us. Don’t argue with the market, because it doesn’t care what you have to say. Stick with the trend. Have a great weekend!