The day kicked off with some boring economic releases, but more interestingly was waking up to move lower by Asian markets led by the Nikkei and Shanghai. Futures didn’t get a boost when import prices came in as expected. However, a weaker than expected home price index (month over month) reading helped propel sellers forward. Once again, by mid-morning the market would find support and move off its lows. We can certainly point to the large about of liquidity the Fed injects to primary dealers each day around 10:15am. Regardless, support continues for this market even as sellers have the upper hand. Even with the support intraday, the NASDAQ could not escape its first day of distribution (second if you count yesterday’s stall day). The trend is still up and we continue to stick with it.
There is certainly a mixed picture when taking a look at some market leaders. Yesterday wasn’t a particularly good day for momentum names, also known has growth stocks. Today, we saw a few more names like ARMH and TSLA move lower with ARMH failing its most recent breakout. Not typically a good sign along with NFLX. Other names like CREE and NTAP have been winners, but fell hard today. On the flip side you have names like GOOG, MANH, NOAH, LL, BA, and TDG to name a few show nice action despite the NASDAQ distribution day. It is important to stick with our money management rules and sell discipline in light of the noise driven by CNBC and the like.
Two negatives outside growth names come from your typical leaders in a bull market. Financials and semiconductors have been lagging and severely underperformed today. ARMH is in the Semi sector and followed right along with the selling today. Financials are another area we need to see and lead. Attempting to call a market top here because these groups underperformed today is quite silly. However, if we do begin to see weakness these two groups will be the ones to watch.
On thing at Big Wave Trading is we have a plan regardless of what we think of the market. Case in point is this chart showing the likelihood of low returns going forward.
Do you have plan for a low return environment? What if we have better returns? Our service answers these questions. Stay with the trend.
