Looking Through The Window

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.

Fate of the Market

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.

Quietly Up

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.

A Pretty Pullback

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.

EL Maybe

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.

Slight Distribution

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.