Home Prices Jump as Stocks End in the Green in Extremely Light Turnover

Early morning economic news did help the market at the open. However a disappointing consumer confidence, Richmond Fed, and New Home sales figures did halt the enthusiasm. Europe continued to remain in no man’s land with Spain leading the market lower. If I had to make a guess the IBEX 35 would be the next stock index to see a major break lower. The FTSE MIB may not be that far behind. Back here in the States the story of the day is the extreme light volume as the Dow hits all-time highs. There simply isn’t the institutional interest in the market here despite the bulls CNBC parades out on their sets. A last minute push from the buyers pushed the markets to the highs of the session. The Dow once again led the way with Small caps lagging behind. We can debate the validity of this market rally because of QE or we can simply just take the gains. It is up to you. I’d rather take the gains and have an exit strategy. SPLK gave up majority if its breakout gains from yesterday. Volume was well above average and this type of action has become the norm as of late with breakouts. LNKD has tried to continue to hit new highs, but has struggled as of late. FLT has been able to escape the reversal fate and continues to act like a true big wave trading stock. The market is not making it easy hanging onto these stocks, but if you stick to a rules based trend following system you’ll avoid pitfalls. Volume was once again lower on a day where the markets close in positive territory. At this point you could simply ask if volume is higher or lower and you’d know whether or not the market was up or down. QE has certainly thrown a wrench into the markets, but it has certainly pushed away volume. Sure option volume has jumped, but it has not replaced the volume lost since the Fed’s printing began. Price is number one in our books, but it does beg the question will volume ever return? We remain in an uptrend and will continue to stick to the long side.

Cypress Bailout Dominates Headlines as the Market Cools

This uptrend is hanging by a thread, but continues to find just enough support to halt any correction. It is very easy to blame the Dutch Finance Minister even after clarifying his statement. However, even after clarifying his statement the market still couldn’t find its way back to positive territory. LNKD wiped out Friday’s gains while V broke through a buy point. SPLK, V, AMBA, and LL broke out of bases on strong volume. The fear is will they end up like LNKD wiping out Monday’s gains? Questions only tomorrow will bring and we’ll continue to plug along in this uptrend until we get a signal of a possible change. There was quite a bit of noise over the Cyprus bailout and it being the new template for future bailouts. From a trading perspective we do not care one way or another. Our rules will guide us with the help of prices. However, it begs the question why would you ever have a deposit account balance above the insured amount? It’ll be interesting when they do open the banks what depositors with balances greater than 100,000 Euros will do. It is a side show now and we’ll draw great comic relief from it. Our two leading stock indexes continue to show weak relative strength to the general market. For the past two years both of these indexes have shown weak relative strength. The search for yield has not come from the growth side of the house, but the value side. Dividend paying stocks yielding higher than the 10 year treasury yield have been very popular. However, focusing in the top performing stocks like FLT and cutting laggards like AAPL will reap you great rewards. Tomorrow we’ll get a reading on durable goods orders. Alongside durable goods more Cyprus bailout talk will likely continue. Focus on price and ignore the opinions. We remain in an uptrend and there are stocks breaking out like AMBA, LL, V, and SPLK. Distribution count stands at 4 days on the NASDAQ and S&P 500. Any further distribution will likely tip the scales in favor of a correction. Time and price will tell. Cut those losses.