All appeared well until the final hour of trading. Retail sales kicked off the morning with month-over-month figures coming in-line expectations. Crude oil continues to sink to multi-year lows and there is no end in sight. This market simply could not follow-up yesterday’s gains with any sort of follow-through. No real big surprise there as this year has been full of failed follow-through attempts. Volume was MUCH lower today across the board. Institutions were simply not willing to follow up yesterday’s action with heavy buying. The market has quite a bit to digest given the geopolitical environment across the globe. Summer trading continues to roll on.
There are doubts the laggards in this market overall have been the Dow Jones Transportation, Industrials, and the Russell 2000 stocks. The only saving grace for this market happens to be NASDAQ 100 names. NDX is still above the 50 day moving average. At some point the index needs to have other indexes join. Stick with strength and strength is with NASDAQ 100 names.
Continuing to look at our leaders AMZN, FB, NFLX, and SBUX we do see some holes, but overall they are holding up. PCLN lost its gap low, but remains above where the stock closed prior to releasing earnings. FB and AMZN continue to act well as well as NFLX. SBUX bounced off its 50 day and remains in its uptrend. While these stocks are still are acting well they are the exception rather than the norm. This market needs some help from other stocks. Leadership needs to broaden out.
Seasonality really is not in our favor here on the long side of the market. September tends not to be a kind month to stocks too. Anything is possible, but odds are still stacked against us to get any sort of meaningful move any time soon. If we were heading into the 4th quarter things would be slightly different. The stock market loves to rally during the 4th quarter. We simply are not there yet. Patience will be rewarded along with sticking with the process.
It is not worth trying to out think this market. Stick with your price signals and manage your risk. Cut those losses short.
