Positive economic data helped fuel a positive turn in futures pre-market. However, it was Italian bond yields stealing the spotlight. Headlines are now beginning to turn to France’s bond yields. Contagion is real in Europe and it is going to sweep the Euro union. Over on this side of the pond near noon time stock prices jumped in a hurry pushing the NASDAQ up more than 1%. It was clear the NASDAQ was going to be leading the day with the S&P 500 and Dow Jones Industrial average lagging. The major indexes finished off their highs, but the late day selling in the Dow was quite noticeable. Late day selling in the Dow names really helped separate the NASDAQ from the rest of the pack. A good day, but we continue to wait for institutions to step up.
We are certainly seeing a few stocks looking like they are about to take off to the races. But, with the major indexes below their 200 day moving averages (resistance) it is holding many of these stocks back. Ignoring sentiment and market pundits opinions the market is poised to breakout to the upside despite this morning’s action. There are many negatives with the market here the biggest being the European Union debt crisis. Take a look at yields soaring in Europe; it will come to America if we continue to spend far more than we take in. We must act now to avoid the clown show that is the European Union.
Even after solid gains on the NASDAQ it is okay to be cash heavy. Cash remains king and until we get confirmation from volume it remains difficult to get long in a heavy way. Of course, this can change in an instance if volume does kick in. Do not chase stocks, we do have a few stocks setting up and ready to breakout. Chasing a stock increases the odds of you being shaken out of the stock. Stick to discipline trading it is how to trade stocks in this market environment.
Always cut your losses short, it is your insurance policy for your portfolio.
