After yesterday’s sell-off following AAPL’s event sellers punished the stock once again sending shares down more than 4% weighing on the NASDAQ. On the bright side the Dow Jones Industrial average was up more than 135 points leading all major market averages. Wholesale inventories and Mortgage Applications were released, but weren’t paid attention to. A positive sign for the market was the move off the lows intraday. Volume was light on the day even with the volume spike in AAPL. The NASDAQ ended its win streak, but the S&P 500 closed positive for the 7th day in a row. A few leaders were dinged up today, but overall we remain intact and moving higher.
Homebuilders moved higher for the fourth straight day despite a drop of 13.5% in mortgage applications. Homebuilders have been stuck in the mud since June and have yet to regain any traction whatsoever. PHM is trying to recover from its lows made in August, but really has not been able to fill the gap made on 7/25. ITB and XHB are beginning to look healthier, but we’ll need to see buy signals from the ETFs that we have yet to see. It’s always about price and if you follow it properly with sound money management you will succeed.
At some point it would be nice for the market to digest the recent gains in a nice orderly fashion. This morning wasn’t all that orderly, but would have been okay if we had ended the day in the red. Not that we’ll complain about gains, but a little sideways action to cool off is helpful for the market to continue its momentum. Volume was quite solid heading into the first of the month and has tapered off here, but it isn’t a warning sign just yet as we have yet to have a day of distribution. Sellers aren’t in the picture here and while we obey price this market appears coiled for a big move higher. Whether that may be the FOMC saying “no” to taper next Wed or some other reason we do not know. What we know is right now and the stars are currently aligning for a run to the upside.
Stay classy.
