The Market Stages a Big Reversal as Volume Jumps

Earnings headlines certainly spooked the market as well as housing data from the start.  Traders crushed the open sending shares down to their lows of the day before rebounding.  Volume rose on the day showing some support for stocks, but still lacked the thunder normally seen when big institutions step up to the plate.  Price gains were hefty as Google and Apple Computer led the NASDAQ higher as well as Goldman Sachs.  Stocks just finished off their highs of the day capping off quite a rally leading into some big earnings reports.

Apple Computer was the most notable release and as usual it crushed estimates.  If you don’t know by now, this is how they play with earnings:  beat then guide lower than the street.  Quite a simple recipe for success!  However, looking at where the stock ended the day on its earnings in April the stock closed at 259.22 and in after-hours trading today it closed at 259.20.  In a span of a month in back to back “Best Quarter” ever the stock hasn’t moved more than two pennies.  I would think having back to back “Best Quarter” ever the stock would be much higher than where we see it today.  Value folks will say its a steal and those looking for price confirmation will say it is weak.  Thus, we have a market for the stock.  And with it coming under distribution as of late we’ll need to see the stock move higher with conviction.

The market shrugged off housing start data showing the lowest level since October of 2009.  It is no secret the housing market will remain in trouble until the supply and demand picture becomes more clear.  As long as prices stay high demand will simply not meet supply.  We saw this scenario play out as the tax credit expired.  But, the stock market has been able to shrug off negative data and today showed once again it simply isn’t looking at the housing market.

We certainly need to see some power from this market.  Perhaps we get the signal tomorrow or Thursday, but we need to see the institutions begin to operate in this market.  So far we have yet to see strong leadership with massive volume.  Are we close, sure, but we’ll need to see some power soon for this market to really show us some strong gains.  We are still below the major moving averages and a strong showing from the market to get above these levels will go a long way!

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