Today’s session stayed within the new normal with another volatile session as the Dow Jones Industrial average posted another triple digit loss. Early morning futures were dealt with a blow as December retail sales were weakier than expected. However, morning buyers were up to the task pushing the market off its morning lows. Not to be outdone sellers were able to punch back sending stocks to their lows just before the release of the Federal Reserve’s Beige Book. Just prior to the release there was a huge surge in Crude Oil sending the commodity higher by 5%. Along with the USDJPY currency pair stocks were able to push back towards the highs of the session. Volume on the NYSE was helped by JPM and WFC, but volume was lower on the NASDAQ. The lack of surge in volume does not give us confidence this bounce can last more than a few days. Given the surge in volatility and lack of momentum to the upside we still remain in a neutral stance keeping position sizes small and tight stops.
Just prior to the market close there were rumors hitting the wires from Reuters Samsung approached Blackberry (BBRY) to take them over. The stock soared on the session as many day traders were able to take advantage of the intraday swing. Whether or not this rumor has teeth the top of the range of the rumored offer is $15.49. Still some nice upside, but far from the gains we normally expect out of our huge winners. Try and ignore the talk over what BBRY may or may not have for patents and whether or not this will be good for Samsung. Price will tell all you need to know. Have a sound approach to risk management and you can profit.
A bit of good news today was the relative outperformance by the Russell 2000 when compared to the broader market averages. The Dow was the laggard on the session closing lower by 186 points or 1.06%. If this market is to continue lower we would love to see the Russell 2000 to continue this trend of outperformance. When this market does turn we want to be getting on board those stocks having held up during the market decline.
This morning JPM and WFC reported earnings and they were not well received. JPM missed earnings and revenues while WFC fared a bit better during the quarter than anlayst had expected. When the market was at its lows so were these two stocks, but both managed to climb higher right along side the market. Both charts are now a mess and are weighing quite heavily on XLF. Tomorrow we will see BAC report earnings and those who are long the stock and XLF will be praying to see a positive reaction to BAC’s earnings.
Given the push off the lows a rally into the weekend is not out of the question. Despite the lack of volume on the push higher we still can squeak some gains out, but it does not mean we are going to have a full fledged rally. Stick with the game plan and push forward.
