Today’s session started out as a decent day on the street ended in a sour mood. Pundits are blaming a timely quote from Icahn expressing his concern over the market and a possibility of a near-term correction. At this point, who hasn’t said this? Volume ended the day lower across the board suggesting the selling wasn’t as fierce as price may suggest. A few leading stocks took it on the chin today as well as other leading stocks. It certainly suggests caution may be warranted here and a break of today’s high along with positive action from leaders would negate today’s action. We remain in an uptrend, but with a small blemish and we’ll proceed with caution following our rules.
The action that caught our eyes was in some leading stocks like TSLA and FB. TSLA has not been able to find any footing as of late after it reported earnings earlier this month. Whatever the reason for the stocks decline because of car fires or simply a high PE the stock is clearly in a downtrend and looking to continue lower. FB is another leader struggling after earnings and appears to be challenging its November lows. Other names we took note of today were SCTY, DDD, and YHOO. One day doesn’t make a trend, but if we see other leading stocks act like FB and TSLA we’ll have some serious concerns.
Janet Yellen’s testimony in front of congress helped out the home building sector, but today’s NAHB put a cap on the move. The NAHB survey estimates suggest a reading of 55 when actual were 54. To us the number could have been 50 it is the action in the stocks we are most concerned with. XHB appears to be struggling to get above $32 and it appears to be quite a few sellers at that level. PHM appears to be the strongest of the bunch, but it will take more than one homebuilder to hold up this group.
Today is only one day and one day wonders do not produce trends. We’ll need further evidence to have our model change into neutral mode. We may be cautious, but we are in the QE environment where dip buyers have been rewarded. This trend hasn’t ended yet and we’ll stick with our plan. Ride winners and cut losers!
