Fears over the dollar, plane crash, and potential war in Yemen had many traders scared this morning. Heavy selling began the day and it appeared as if we were heading down the same path as yesterday’s market. As the early afternoon progressed it appeared we were going to get a massive reversal as volume was running hot. Sellers had a different idea erasing gains and sending the market back into the red. It would have been nice to see big volume support today, but it simply was not in the cards. At least small caps did not lead to the downside. We remain in very risky environment. This market desperately needs a big push higher here.
Sentiment jumped week over week on the AAII index. Even the NAAIM exposure index rebounded significantly week over week. AAII Bulls jumped 11 points to end the week at 38% while bears were down 7 points to 24%. Bulls were quick to jump back into the market. The same could be seen on the NAAIM Exposure index with managers increasing equity exposure nearly 20%. This big of a jump coupled with the recent sell-off has a few bulls running scared. Stick with a process and let others try to define their outlook as bullish or bearish. We focus on being on the right side of the market.
Crude oil rebounded since hitting a low earlier this month. It helps to have a new threat of war in Yemen and possibly the South China Seas. The War Machine continues to dominate this world and it is quite a shame. However, many companies benefit from the War Machine and would hate to see a peaceful world. UCO jumped 10% on the session, but XLE did not join in on the rally. ORA is in the alternative energy space and has quite the run. It is a stock to keep a close eye on. Three favorite solar names FSLR, CSIQ, and ENPH continue to remain in consolidation phases. Neither of the three have presented any recent buy signals.
A few weeks ago we mentioned a few short ideas: TSLA, GMCR, BIDU, and NFLX. All four continue to remain in weak price patterns and appear to be headed lower. Shorting is not for the faint of heart and if you have yet to grasp the long side we would suggest you steer clear of shorting. Make sure you have a solid process going long before even thinking about shorting this market. It is not easy money.
Let’s see how we can close up this week’s action. IF we have a shot of moving back up we must see it soon. Have a great weekend.
