Another wild intraday session for stocks, but buyers were able to win out at the end of the session. Volume on the exchanges was mixed, but the major indexes saw volume lower on the day. Over the past two sessions the market has been able to work off oversold conditions and is in a position to return to highs. We continue to lack the upside thrust typically seen when institutions are active in accumulating shares. During this run since 2009 volume has not been a huge driving force where the Federal Reserve has been. This market still remains in limbo as we consolidate the recent gains. Whether or not we push higher or lower will depend on if we break into new highs or head lower through the recent lows.
A push back into new highs is a likely scenario with the Federal Reserve coming up next week. Will it actually occur is a different story. No knows where the stock market will go, but it will not stop people from trying to guess the market’s direction. Simply allow price to dictate your move. We are still quite long from the August lows and if we push higher we win. If stocks turn lower we will simply obey are exit rules and get out. There are no opinions getting in the way of our trading process.
A quick look into sentiment this week shows bulls were scared this past week, but not out. AAII bulls dropped to 40% while bears inched higher to 26%. Neutral participants in the AAII once again ended at the top. Whether or not this is telling over the long haul remains to be seen. One thing is for sure is the AAII survey will favor neutral readings during uncertainty. NAAIM exposure index fell on the week to 63% invested. More respondents simply reduced exposure. There were still some bulls who remained 200% invested. We are not overly bullish here and it may be a good sign for those who are long. Price will be the decider.
There is a group we encountered in our scans moving today. Our chat room is getting the stocks that failed to make our New Positions report, but are still giving long signals. You must be a platinum subscriber to take advantage of these picks.
Another week comes to a close we inch closer to the Federal Reserve meeting. It will likely be the next to last meeting before we see the latest Quantitative Easing program end. Many feel rates will rise much sooner, but given how deliberate the Federal Reserve Bank moves it is unlikely they will deviate from their plan. When rates rise and we do not have a QE program is when the market will get real interesting.
Go out and enjoy the weekend!
