Stocks finish off the lows of the session as the market assesses a bickering central bank
Better than expected home price data from Case-Shiller, Chicago PMI, and consumer confidence figures help drive the market higher for much of the day. Volume had an advantage as Monday’s trading session bore witness to the lightest trading volume of the year. It wasn’t a surprise to see volume surge. The market was tripped up by the bickering going on over at the central bank. Our masterful central bank has an internal feud as to what to do about monetary policy going forward. This spooked the market as the NASDAQ lost nearly twenty points in forty minutes. Support did come in during the last half hour as a good sign and the NASDAQ was the only index to flash a distribution day. We still aren’t out of the woods just yet, but if this market wants to move higher we’ll need to see it move off the lows here quickly.
August was just not a good month for stocks as we saw the market cough up much of the gains in July. July’s rally into August was on light volume, meaning it lacked accumulation. We like to see volume on accumulation days above the 50dma, but we can not see higher prices with volume coming in lower than the previous day. It simply states institutions are simply not accumulating shares and the bounce will be short lived. August proved we need to have volume in order to support a sustained move. So far we are holding the July first lows and Doug Kass along with Jim Cramer still have the correct call. We simply do not care whether or not we make “right” market calls we are only interested in making money.
Our leading stocks continue to act extremely well in this market environment. A positive sign for the market as watching your stocks is of the utmost importance. However, we do need a cooperative market and today we did see a rush of support come in near the lows of the day coinciding with Friday’s lows. It will be up to the institutions to carry this forward and power forward. We are still looking for a powerful move to the upside with volume being higher than the previous day. An added bonus and big confirmation of a trend would be to have volume above the 50dma as well as the day prior. Powerful moves off bottoms come with tremendous price and volume moves.
A signal to move cash from the sidelines would be a powerful move to the upside, the question is what stocks. We have the answer!
