We shouldn’t read too much into yesterday’s low volume rally. We’re still in pullback mode, waiting to see how heavy it all may get.
We still think tests of the 50-day moving averages are in store for the major indexes.
But today is the last trading day of the quarter so don’t be surprised to see “window-dressing” as managers buy stocks to add winning stocks to their portfolios for show.
We expect the S&P 500, and broader market for that matter, to head lower for a test of its 50-day moving average.
We’ll need to see sell volume dry up to remain bulls. Signs of institutional selling will trigger us to lower our Buyer’s Edge bias.
Keeping it simple.
Distribution for the Dow and S&P 500 Tuesday gives warning.
We’ll consider ourselves in pullback mode until proven otherwise. One day of distribution means little. Any type f meaningful top will be accompanied by more distribution and a breakdown of leadership.
Leaders Apple (AAPL) can’t get past its $700 mark, and Amazon.com (AMZN) has sunk below its 10-day moving average. The fate of the market may very well be found here.
Zillow’s (Z) sudden downside move this morning may have been sparked by comments from website Citron Research, which said the company is facing “a day of reckoning.”
Who knows, who cares? Trade what is, not what should be.
If the stock closes at its low end we’ll exit. We’ll remain holders as long as it stays near its high.
A rare Reverse Symetrical Triangle technical setup for the Transportation index.
We seldom take these swing trades. Only traders with a high risk tolerance may find something like this attractive.
The idea here is put a stop under 4,900, go long here. Notice how we mentioned the stop first. Capital preservation is goal number one.
What looked like major distribution Friday may just from volume being much higher due to the S&P rebalancing.
Market appears tired at these levels. Expect further pullback on the major indexes. Perhaps we will even see a change in the Leadership landscape.
A small gap up for the Nasadaq this morning will most likely be filled at an unknown time. This market seems a bit tired, perhaps ready for the weekend already.
If it weren’t for a rare public appearance from hedge fund manager Ray Dalio on CNBC, who mentioned Hitler of all things, we’d say it’s a pretty boring Friday.
While Mr. Dalio sees low odds for an economic downturn, his comments are most indeed notable:
I don’t know whether we’re beyond the point of being able to successfuly manage this. And I worry then about– social disruption. I worry about– another leg down in the economies– causing– social disruptions. Because deleveraging– can be very painful, it depends how they’re managed. But when people– get at each other’s throat, the rich and the poor and the left and the right and so on, and you have a basic breakdown,that becomes very threatening. And for example, Hitler came to power in 1933, which was the depth of the Great Depression because of the social tension between the factions. So I think it very much is dependent on how the people work this through together and worry about the social elements.
The broad market pullback continues its subtle ways this morning with the exception of the Transportation Index (TRAN.)
Watch this key sector for its potential to serve as downside leadership should the entire market begin to crumble as well. It is now officially under its 50-day moving average.
Bulls are liking the looks of the broader market as its gentle sell off shows little sign of institutions dumping shares en masse.
Both the Nasdaq and S&P 500 posted accumulation days Wednesday, where volume greater than the previous day’s on an up day gives evidence of dominant buying interest.
Stock hot shots Apple Inc. (AAPL) and Amazon.com (AMZN) are providing solid leadership as they inch higher.
Elsewhere, continued success from recent breakouts LinkedIn (LNKD) and Rackspace Hosting (RAX), to name a couple, keep us encouraged for other top names setting up.
We’re watching Estee Lauder Cos (EL) as a potential breakout for indication of how well the market will treat other, better stocks we like.
Quarterly revenue growth of 9.2% (yoy) for this cosmetic maker is decent, though not the +20% we really want. It holds favor with the market after it gapped up over the summer on earnings news, and may possibly be ready to trade into higher levels.
Sellers dominated the day, though were only a touch stronger than yesterday as only the Nasdaq posted Distribution. Maybe the lighter volume from the Jewish holiday yesterday should weigh in here. Dunno.
Looking for a reason? Economic bellwether FedEx (FDX) fell 3% as the company reduced its full-year profit guidance. Sure, that’s it.
Tomorrow we monitor for signs the sell off is either loosing or picking up steam. We’re staying Bulls until proven otherwise.