The story of this uptrend has been Mondays closing lower. Volume was lower today, but even with Friday’s volume today’s trade was quite light. On the face of it we do have a market continuing to consolidate its Fed induced rally. Friday’s session saw sellers knock down the early rally and they were able to continue their operations today. Growth stocks as well as technology stocks saw the brunt of the sellers operation. GOOG escaped their wrath, but on the whole growth stocks were the ones under quite a bit of pressure. We continue to escape distribution, but we haven’t seen the push from growth stocks we normally see here. Many are close to breakouts, but as time progresses we’ll need to see them lead the market higher.
There is still quite a bit of talk over the fiscal cliff and continued European worries. Europe’s woes will not be solved here any time soon. Deleveraging takes time if the masses are not able to withstand the pain needed for a quick recovery. The same goes for the United States. With Obama in the lead and the Democrats looking like they’ll take the senate it appears we won’t see any resolutions to our debt woes in the near future. Democrats if they continue with control will undoubtedly raise taxes and cancel and reduction in spending. While raising taxes may or may not raise revenues not cutting spending is what will add to the deficit. Now the real question will be how will stocks react? It is anyone’s guess, but if you stick with leading stocks and price you will not lose.
The last week of September and it is hard to believe Fall is here. All of the gains in the month have come on only central banking days! It would be nice if the market could get some gains without the help from central bankers. In addition, it would be nice if High Frequency Trading was outlawed and stopped from distorting price and volume on our stocks. Mark Cuban said it best: “High Frequency Trading simply adds volume not liquidity.” Even with High Frequency Trading we still have an advantage and that being price and focusing on a leading stocks.
Another week in this uptrend starts lower and with very little distribution we can’t help to think this uptrend will continue to march on. Cut those losses short.