Once again the Debt Ceiling debate continued to dominate the headlines despite earnings season. The lack of ability for Washington DC to come together continues to strike fear amongst market participants. Institutions stepped up their game today selling stock on the New York Stock Exchange, but the NASDAQ thanks to the Big Cap Technology stocks was able to avoid heavy volume selling. Small caps were not so lucky leading the market lower. For the second straight day late day selling erased any positive headway the market had made intraday. The lack of clarity from Washington DC has put a stalemate on the direction this market wants to take. At this point, distribution has piled up and many leaders are coming under fire.
BIDU stock reported excellent earnings vaulting the stock more than 5% on the day. However, another leader UA stock did not fare well. NFLX stock was another loser, but the stock was able to find support at the end of the day finishing above its 50 day moving average. There is not a clear picture being shown from the leaders. Earnings season always produces fireworks, but with the major averages looking shaky it is hard to be confident with the long side.
It will come down when the lovely folks in DC get their act together and produce a viable bill. Will the market be able to find support? Will leaders continue to lead? These big questions to be answered by this market and by its leaders.
One positive for the market, outside the negatives is we continue to get more oversold. While this should NOT be the only decision point for you it is a curious one here. The NASDAQ is sitting below July highs and with a swift thrust can push into new high territory. Again, there needs to be some serious improvement amongst market leadership to see a serious push into new high territory. Be nimble here and do not get carried away with one side of the market or another. While there is a glimmer of hope do not bet the house on it. Wait for conditions to improve and jump on the opportunity.
Always cut your losses.