Volume Ends Mixed as Stocks Pause

Volume exploded at the open as traders pushed the market to its highs.  NYSE volume was running higher about 70% over Monday’s levels while the NASDAQ saw an increase of 20%.  Consumer sentiment came in slightly lower than expected at 50.4 (expected reading 51).  The morning highs weren’t to be seen again, but volume faded across the board ending higher on the NYSE and lower on the NASDAQ.  Catching the attention was the drop in commodity prices with Gold and Silver leading the charge lower.  Crude oil pulled back failing to clip the $80 dollar level.  The S&P 500 did stall out today, but avoided distribution.  All in all not a bad day in the market.

We did see a few leaders from the semiconductor sector take a few hits today.  These semiconductors have been leading the way and with a few of them taking hits it is something we have noticed.  We’ll keep an eye on these stocks as we move forward.  A few other leading stocks did show some bearish engulfing patterns, but volume wasn’t hot.  Today we didn’t bare witness to any real weakness, just a little bit of weakness.

We still remain in extreme overbought levels as many stocks still remain above key moving averages.  Most notably the number of stocks over their 20dma remains at 85%.  75% of stocks are over their 50dma indicating the market is elevated.  Perhaps the market can work off these levels, but something we’ll keep an eye on!

Financial stocks began the day in good spirits but many closing below their mid-points.  XLF was rejected at the 200dma closing near the lows with volume elevated on the day.  Normally, a rejection at the 200dma with increase trade is not a good signal.  But, given the recent move it isn’t out of the ordinary to see some pullback.  Look out if we are to continue the selling on increase trade.  Many financial stocks look like BAC, JPM, WFC, GS where demand was able to keep up with supply.  If financial stocks continue to act weak and break lower look for the broad market to move with them.

Moving onto another Electronic Traded Fund the RTH witnessed selling on the consumer confidence numbers.  University of Michigan will produce their final numbers on Friday and should point to fears about jobs.  For now, retail stocks continue to remain weak.  Even discount retailers showed weakness including ROST and DLTR.  The consumer is going to be under pressure until the jobs picture becomes clear from its muddy mess.

Taking gains here isn’t a bad thing as we have run up quite a bit from the July first lows.  Always remember to cut your losses as it is your best protection.  If we continue the weakness we’ll become a bit more defensive.  Until then, enjoy the action.