European stocks on Labor Day took on massive losses on Monday while the US was enjoying the day off. US Equity futures weren’t enjoying much of anything indicating a sharply lower open for US stocks. The only piece of economic data on the horizon was the ISM Non-Mfg index. Market participants were certainly paying attention to the number due to “headline risk.” In a surprise reading, the ISM figure was better than expected and higher than July’s reading. Despite the news, sellers took over and pushed the market to session lows in a hurry. Just when market Bears were thinking this was it, stocks recovered. Volume ran higher across the board giving the indexes a technical day of distribution, but underneath it all was accumulation. The market has plenty of work to do, today was a step in the right direction.
Market leaders looked positive today, but the landscape of market leadership continues to be rather thin. The sharp sell-off in August has put a lot of pressure on individual stock names and it simply takes time to clear out the junk. We have our leadership list and we will continue to hunt down opportunities. For now, the market is range bound and trendless. Many will churn their accounts, burn cash and have very little capital to deploy when the timing is right to get long this market.
The media is certainly running with the European crisis. The market is pricing in a member or two of the European Union to leave. Greece is an obvious choice here as they are having a hard time meeting their austerity measures and the demand from creditors. I can’t blame the Creditors; Greece has yet to prove it can hit anything resembling a fiscal target. Greece should look to New Zealand and how that country lifted itself from the IMF and financial terror. It is a great study on how and what it takes to lift a country from economic tragedy. Learn from history to avoid repeating it!
As always, cut your dang losses here. You go long and/or short always have a game plan to get out! Success in Stock Market Trading demands you cut your loss and ride winners!
