Early trading was dominated by sellers as this market continues to operate in overbought conditions. Morning lows saw buyers respond pushing the market above the midpoint of the session. All eyes would point to the release of the latest Federal Reserve meeting minutes. Many were anticipating potential talk over a new round of QE were somewhat disappointed. The minutes were not exactly market friendly despite the initial surge after the release. On the downside, once again was the Russell 2000 leading the overall market lower. The Dow was able to close flat on the session. Flight to safety continues as this market remains in overbought territory.
So many are looking for this market to roll over. On a daily view we are definitely overbought except for the McClellan Oscillator. What we DO NOT HAVE is a lot of distribution days piling up signally a heavy market. At the moment we only have two days of distribution on the NASDAQ and one on the S&P 500. The only bit of concern is we have yet to really consolidate the recent move. It is possible over the next few days we could see distribution pile up, but for now we simply do not have the pile up of distribution days signaling a possible market turn.
A bit concerning on the session were a few market leaders getting hit and hit hard. BITA and TSLA are two such stocks who are leaders having a bad day today. SNCR was quite a disappointment as the stock was absolutely obliterated today. VIPS was a leader down today, but showed a tremendous amount of support. Keep it simple here and do not overthink this market. If a stock breaks down like SNCR you simply get out. It if a good idea to have sell stops on the books to avoid potential disasters.
Now that we have the Fed minutes out of the way it will be interesting to see how we close this week up. Remember, this week has been historically bad for stocks and we skirted any downside move. Will small caps come back in favor or remain well behind the S&P 500? Stick with the process and shed those losers.
If you are from Buffalo, NY and reading this we have no idea how you can deal with 6 feet of snow in less than 24 hours. It is far too early for snow let alone sub-freezing temperatures.
