Sellers Leave Blemish on the Market as Stocks Close Off Their Lows

Sellers dampened the mood in the afternoon as stocks close just off their lows.  Volume was higher on the NASDAQ and NYSE.  The NASDAQ was able to close above its open level, but the late day selling leaves a bit of a sour taste on the day.  All is not lost, we were able to see plenty of stocks either consolidate or move higher showing positive action.  Many leading stocks continue to act well as we are beginning to see accumulation trickle in. 

Even with the unappealing close the NASDAQ was still able to show accumulation.  More importantly we continue to see small cap stocks shine and lead this market higher.  The continued out-performance of this index shows this market has strength.

At this point it would be nice to see the market pull back here just a bit and consolidate on lower volume.  Markets can not move in straight lines and a little consolidation would be very healthy at this point.  This doesn’t mean you should simply sell your stocks and wait for a pullback.  It simply means the overall market would benefit from low volume pullbacks. 

Low volume pullbacks are healthy for the market because it can help the strongest stocks set better relative strength lines.  It too can relieve some overbought conditions as well.  Although the market can remain overbought for long periods of time a little pullback would do it some good.  Pay attention to breadth measures as the market progresses.  Weak breadth often indicates the move is nearing its end but remember pay attention to the leaders as they will let us know if the uptrend is waning. 

Wanting and getting a pullback on light volume is a different story.  We have plenty of stocks moving at the moment and new ones cropping up.  This market may be able to sustain a further move to the upside.  Always listen to what your stocks are telling you and then look at the market.  It is when leadership falters we need to pay attention.  At this moment, they are moving higher.