Early morning disappointing earnings news from IBM kicked off the week by sending US futures lower.  European indexes were lower following the weekend adding to the weakness in US futures.  Since the last Federal Reserve meeting stocks have been unable to hold many intraday rallies.  Today we saw the intraday rally hold as sellers seem to be avoiding the market.  Volume was lower on the session showing institutions were not overly active in today’s move.  Traders turned their attention to AAPL earnings after the bell as the stock closed the regular trading session with a gain of 2.14%.  Not a bad way to start the week, but we did lack the volume necessary to confirm a new market rally.  We still remain cautious here, but remain open to whatever direction the market will take.

While we will continue to keep an open mind and go with the flow of the market.  However, when you see Utilities leading the way it does not give you much hope for the market.  We could very well see this swing in favor of technology stocks and other industries, but for now we just are not seeing the leadership you want to see for a new market rally.  It would be nice for biotech to come back to life.  ILMN reported great numbers after the bell and the stock popped more than 15 points during the after-hours trading session.  The key is to remain patient and wait for the proper opportunity to present itself in order to attack the market.

It is important to note the next Federal Reserve meeting is next week.  Wednesday the 29th of October we will hear from the central bank and what everyone will want to know is whether or not QE will be ended.  Mind you the central bank has already committed to keeping rates very low for a very long time.  Do we need QE to stay forever?  If the Federal Reserve is concerned with equity markets you will see them extend QE the minute the market drops again.  When the S&P 500 was down more than 9% from its recent high Bullard made comments QE may need to stay!  We believe the Federal Reserve wants to keep equity prices high and will stop at nothing to keep them there.  Has the Fed now backed itself into a corner?  It is likely.  Confused?  Come join Big Wave Trading.

We continue to see new traders entering this game thinking it is easy.  Time will be the ultimate test for new traders.  We love trading and have a tremendous passion for this game.  It is why we are here.  In addition, we love seeing success and sharing in success.  Do not be fooled into thinking the stock market is a lottery ticket.  Gain from our experience and share our passion for the markets.  Keep an open mind, but do not forget to cut your losses.