Stocks Advance in Heavier Trade; AAPL Gains

Federal Reserve’s beige book showed deceleration in 5 of 12 regions tripping up stocks mid-day

The market notches an accumulation day with volume jumping higher than Tuesday’s depressed levels.  It was important to see a day of accumulation for this market since last week’s follow-through day.  Stocks ran into a bit of resistance prior to the release of the Federal Reserve’s Beige book.  However, the market was able to rebound from the initial selling and close above the mid-point of the session.  A true sign of strength is for the market to be able to rebound after a bout of selling.  The market had plenty of opportunity to roll-over and succumb to selling, even late in the day it appeared the market would give up and buyers would have no of it.  Accumulation is a great sign and today was an all-around positive day for stocks.

It would be nice for this market to continue to work sideways with accumulation sprinkled in between light volume pull backs.  At the moment the percentage of stocks over their 20dma is at 76%, but the number the stocks over their 200dma is only 57%.  Far from being “overbought” by any stretch of the imagination, but we could see a bit of selling pressure as we continue to digest last week’s gains and today’s accumulation.  By no means is this a bearish signal for this newly confirmed uptrend.  It does highlight a point of not chasing stocks as you will get burned.

Apple Computer (AAPL) lead the NASDAQ today gaining more than five points on higher volume helping the NASDAQ today.  The move came on the back of news the antenna issue would cost the company 20% of sales here in the US.  It appears the market has other ideas regarding the direction of AAPL.  Listening to opinions and not the market will cause trading mishaps and missed opportunities.  AAPL today highlights opinions mean very little in the market and only price and volume action rule.

An area I have yet to discuss in some time is the put to call ratio.  Today the CBOE put/call ratio ended the day at .93 showing a bias towards the downside.  But, again Index puts dominate over calls as traders look to hedge portfolios with index puts.  On the equity side, call options dominate the trading action showing an almost 2 to 1 advantage over puts.  This has been the case since early July as we have seen equity call options continue to reign supreme over puts.  It certainly gives a mixed picture, but the fact is a clouded picture is not one we want to rely on.  Given we have a confirmed uptrend and superb Leadership, it is hard to extract much meaning from the put to call ratio at this juncture.

Overall, we had a good day in the market with market leaders continuing to dominate the market’s stage.  Accumulation is always a nice sign, but would be nice for the market to consolidate gains.  Tomorrow traders will certainly be focused on jobless claims figures while we’ll be paying attention to the action of the market.  Focus on what matters and everything else is just noise!

Keep those losses small!