Stocks Kick the Quarter off in the Green but Volume Slips

The second quarter of 2012 got off on a good foot with Small Caps leading the market higher. Volume slipped off of Friday’s levels indicating traders and investors alike were not overly eager to buy up stocks. Positive news from ISM readings where the ISM Manufacturing index ticked higher than expected and prices paid came in lower than expected. Buyers stepped up and pushed the market higher where stocks finished up. Leading stocks enjoyed a boost today outperforming the broader market a positive sign for the market overall. If we ignore volume today was a solid day for the market.

This week is a holiday shortened week due to Good Friday’s market close. Banks are open! Holiday trading always tends to be light in volume and you can forget about weekly volume surpassing last week’s volume. If the market can avoid major distribution and reward leading stocks we’ll be sitting pretty for this uptrend to continue.

Small caps have been struggling to break out as of late and continue to lag behind the NASDAQ and S&P 500. The group led the entire market today and is looking to breakout once again. It would be a great sign for the market if this group can start to move again and lead the market. Big cap stocks in the NASDAQ and S&P 500 have been leading the way and while we won’t argue with the market we would rather see small caps lead. A healthy market needs small caps to lead the way and they just might be on their way.

The conclusion of March Madness is here and we’d be silly to go with Kansas to win. Our apologies to Kansas fans, but Kentucky has one heck of a team. Kentucky’s best 7 players all averaged 25 points or more in High School! Kansas needs a miracle. Enjoy the game!

As for this market, we continue to operate in an uptrend and without any distribution piling up on the NASDAQ it is hard to bet against this market here. Until we see reason to get super defensive we’ll operate on the long side.

January Closes with a Whimper; AMZN Disappoints After Releasing Earnings

The early morning jolt higher the market was hit with unexpected disappointing economic news from the Chicago PMI and Consumer Confidence. While it did appear the market was heading for a day of distribution buyers stepped up just after the lunch hour. Financials reversed course pushing higher a positive sign for the market. The downside was the stalling action as the NASDAQ was unable to hold its gains from the morning. While we did see support, there weren’t enough buyers to erase the stalling action. Volume spiked at the end of the session as monthly rebalancing always ushers in a big volume spike. All in all, today wasn’t too bad of a day for now.

Historically speaking February isn’t typically a month where you would expect a big rally to kick off, but we did see in 2010 where February kicked off a sizeable rally. It is anyone’s guess whether or not we take off from here or reverse course and head lower. A sound plan to attack the market is paramount; if this market is to go higher we want to take advantage. On the flip side, we don’t want to be exposed if this market is to turn lower. Cutting losses and your laggards is a prudent course of action.

The Golden Cross occurred on the S&P 500 a bullish “technical” indicator. We pulled data from Yahoo for the S&P 500 and found 80% of the time this is a bullish indication for the market. What you learn by crunching the numbers is cutting your losses improves your performance. Precisely why we stress the need to cut your losses quickly, it is your insurance policy. We now await the NASDAQ to join the Dow Jones Industrial Average and the S&P 500 to experience the golden cross!

Cut your losses short.