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.

Global Markets Header Lower as Cyprus Mulls Bailout Terms

Over the weekend the biggest news story was the Cyprus Bailout news. The terms of the bailout had depositors losing roughly 10% of their deposits. World markets reacted negatively from Asia to the US, but unlike Asian markets Europe and the US markets were able to rebound from the lows. A bit of a blow to the housing market was a dip in NAHB survey registering at 44 down from 46 in the prior month. This did little to hold back dip buyers from pushing the markets back into positive territory by the afternoon. However, the last hour saw sellers hit back and send the indexes off their highs. Volume ran lower than Friday’s level inflated by quadruple witching. We remain in an uptrend despite today’s open and we’ll remain operating in an uptrend. Why the media is making a big deal over Cyprus is the theft of depositor cash. Cyprus is a safe haven for many Russian Oligarchs and their cash. While it is easy to say the rich should pay, but to steal deposits to increase private cash in bailouts is a tough pill to swallow. The real fear is if this will be the norm in future bailouts in Spain and Italy. At some point these two countries will likely need a bailout unless their economies miraculously begin to grow again. How safe do you feel your cash is in the bank now? Could you imagine if the Federal Reserve and the US government had taken 10% of deposits in 2009? The EU is in unchartered territory and this will be something to watch from a non-trading perspective. At the open the market opened in quite the oversold territory according to the McClellan Oscillator. The indicator has not been keeping up with the market highs suggesting the strength in the move is not sustainable. Anything is possible, but at extremes this oscillator does offer some value. Let’s not forget the Federal Reserve kicks off a two day meeting tomorrow and releasing their policy statement on Wednesday at 2pm. I do expect to see the market to at least drift higher into the Fed meeting where we’ll hear how accommodating the Fed will continue to be. When you boil it down it comes to price. Know your exits.

Markets Say No to Spailout, Stage Big reversal

The EU bailout of Spanish banks was received well when the futures market first opened Sunday evening. Sellers dominated the day as the markets sniffed out and disapproved of the Spailout. US equity markets did enjoy a good start, but selling was unforgiving and relentless heading into the close. Volume was higher than Friday’s dismal showing. At this time, volume is not going to matter as price action is clearly on the negative side. Price action says it all and it is not saying good things about this market. Not helping matters was AAPL’s big reversal despite its annual June meeting. AAPL did not announce any new amazing new product like apple TV or a new iPhone. The stock now appears to be failing at its key 50 day moving average suggesting May’s lows may be the next target of the stock. GOOG has already had a head start on AAPL as the stock put in an ugly reversal day. Both tech giants do not look healthy at this point and will continue to put tremendous pressure on the NASDAQ if selling continues. Volatility kicked it up a notch today getting support as the market digested the news out of Europe. The VIX jumped right off its 50 day moving average today and certainly shows a bit of a fear coming back into the market. At May’s lows the market failed to produce any sort of capitulation. The VIX never made it above 30 a key level where panic enters the market. Until panic enters the market we’ll likely continue to see lower lows and lower highs in this market. Adding to the mess we call a market will be options expiry. Greek elections are being held on Sunday and combining the elections with Spailout options expiry will certainly add layer of complexity. It is crucial we stick to price action of the market rather than guessing what might happen if the Greek elections go one way or another. After today it is pretty clear the bias is still negative. Stick to your stops and cut your losing positions. Your long term success in the market depends on it.