For the fourth day in a row the NASDAQ ended lower, but volume fell on the day. AAPL stock fell more than 1.6% weighing down the NASDAQ and continues to be a sore spot for the NASDAQ. Although the market was shaking off AAPL’s weakness for much of the day and it wasn’t until 2:30 when weakness began to cause havoc for the market. Once Bernanke indicated further stimulus was not going to be the situation stocks dropped hard. Sellers took to the market with no QEIII insight and supporting this market. Another negative day for the markets and we continue to see weakness continuing to signal cash is king.
Despite the late day sell-off the measure of fear, the VIX ended lower on the day. Option traders continue to bet on a bounce. Sellers remain complacent as fear continues to evade the market. It is quite interesting with so many leaders breaking down and the market under distribution we are not seeing ANY fear creep into the market. It is quite extraordinary to see this reaction, but we will continue to take our ques from the market.
If you look at the number of stocks above their respective 20 day moving average it would appear the market is DUE for a bounce. However, the number of stocks over their respective 200dma suggests further downside before we see a meaningful bounce. Regardless, it is speculation on whether or not the market moves higher. We want to be focused on what we have in front of us and that continues to be a weak market with leaders breaking down. This equates to us looking for the shorts in the market and leaving the long side alone.
We completely understand this market could bounce here and bear markets tend to have their fair share of big percentage gains. This means we need to be prudent when going short. In addition, we are going to be maintaining our list of stocks holding up and when the market turns we’ll be ready.
Stay the course!
