From the Trading Desk

February closes on a Sour Note with Stocks Selling off in the Final Hour

Despite a disappointing GDP reading of .1% the market was able to climb near their respective highs. The Dow Jones Industrial average came within 16 points of an all-time high before experiencing a late day sell off. End of the month rebalancing shot volume up by the close, but the damage done by sellers at the end of the day spoke volumes. This week has been something else with extreme realized volatility. The VIX index jumped as the markets sold off in the final hour rebounding after retracing much of Monday’s move. A wild and crazy week for the markets and tomorrow’s economic data should add to the fireworks. We remain stuck in neutral mode and after today’s action it is a good place to be.

Sentiment figures came out today showing bullish pulled back slightly from the II survey, but significantly from AAII. AAII bulls dropped below 30% as bears jumped to 36%. Readings from sentiment survey certainly show bulls were shaken from the moves over the last 5 days of trading. Does it signal a bottom or top? More than likely it does not, but just shows you how fast sentiment will change with a small movement from the market.

Leading stocks remain mixed as a few continue to move higher, but not in high flying fashion. The past week of trading really has screwed with charts. Volatility is something we embrace and love. High volatility leads to great big gains for our trading patterns. Unfortunately, the past few days were so large it has damaged quite a few stocks. While the Dow was able to recapture Monday’s highs the other major indexes were unable to do so. Now you toss today’s action into the mix it really calls into question whether or not any move is going to be sustainable. It appears more chop is headed our way.

Stay disciplined and check your emotions at the door.

Short-term trends:

TICKER ST TREND TREND CHANGE DATE CLOSE %
SPY DOWNTREND CHANGE 2/28/2013 151.61 -0.20%
IWM DOWNTREND CHANGE 2/28/2013 90.48 0.19%
QQQ DOWNTREND NO CHANGE 2/28/2013 67.10 -0.21%
USO DOWNTREND NO CHANGE 2/25/2013 33.21 -1.16%
UNG DOWNTREND NO CHANGE 2/28/2013 19.18 1.91%
GLD DOWNTREND NO CHANGE 2/28/2013 153.00 -1.02%
SLV DOWNTREND NO CHANGE 2/28/2013 27.54 -1.68%
DBC DOWNTREND NO CHANGE 2/28/2013 27.13 -0.44%
FXY UPTREND NO CHANGE 2/28/2013 105.76 -0.55%
FXE DOWNTREND NO CHANGE 2/28/2013 129.49 -0.64%
TLT UPTREND NO CHANGE 2/28/2013 118.29 0.19%

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