From the Trading Desk
What a volatile day it turned out to be with stocks gyrating after the FOMC policy announcement only to close at the lows of the session. Stocks were lower ahead of the announcement as many feared the Fed would inject into the statement regarding tapering bond purchases. In fact, it did not and the market [...]
Anticipation of the Fed tomorrow is tremendous as traders position themselves ahead of tomorrow’s policy announcement. On the economic front today weaker than expected housing data failed to halt the rally in homebuilding stocks today. Homebuilding ETFs regained their 50 day moving average a show of strength. Buyers were out support stocks yet volume lagged [...]
A positive sentiment report from the National Association of Home Builders (NAHB) helped propel stocks to the highs of the session. Prior to the NAHB report the Empire Manufacturing index jumped more than expected. However, a deeper look into the report showed some serious cracks. It wasn’t until after 2pm where the trouble began to [...]
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Big Wave Trading Market Model Hits Sell with Stocks Falling in Heavy Trade
Renewed Greece fears hit the market hard today giving institutions reason to sell stock in mass quantities. For the second straight day the NASDAQ put in a big day of distribution. One positive in the day was there seemed to be buyers supporting the NASDAQ at 2900, but the negatives far outweigh the positive today. We now find ourselves with 4 days of distribution on the S&P 500 and 5 on the NYSE composite. Today’s selling did quite a bit of damage and caution is certainly warranted.
Only 23% of stocks are over their 20 day moving average, just one month ago this figure was over 80%. At the lows today the NASDAQ was only down 3.3% off its most recent high. I suspect a reaction to the recent sell off would be in-store for us. Natural reactions occur all the time to big moves and they tend to be big signals as to where the market is heading. July ’11 we saw the market trip up and fall quickly after the long run up from June ’11. The reaction to the sell-off was quite weak and on very low volume (removing options ex). This time will not be any different, the reaction to this selling is important and a big signal to the direction of this market.
Greece is at it again spreading continued (pick an adjective) worries about its debt situation. Simply using arithmetic one can deduce Greece will have to write-off/liquidate majority if not all its debt. The United States did this very thing in the 1920-1921 economic downturn and it wasn’t more than a year we were on the road to recovery. The sooner the entire global market accepts debt liquidation the faster the recovery will come. Unfortunately, the political will and fortitude simply doesn’t exist in the European Union. Let’s not forget, debt liquidation is coming to our shores too. It will only be a matter of time.
Stay disciplined and cut those losses.