This market is beginning to beg the question if it will ever pull back. A flury of positive economic data after a rise in jobless claims helped fuel buyers to push stocks higher. Support continues to show up as the market sells off, perhaps worried shorts are hurrying to cover, but support is there. Once again, a late day rally pushed stocks back near their highs at the days close signaling continued strength in the market.
Earnings season is in FULL swing and with JP Morgan, United Parcel Service, and Intel reporting strong earnings there was much anticipation for Google’s report. Google wasn’t so lucky with the stocks getting creamed after-hours, down more than 5% after the company reported earnings not up to snuff with a “whisper” number. The company reported its 3rd straight quarter of accelerating sales a very bullish sign for positive price action. We’ll see how this market leader acts tomorrow as the company did report positive growth figures.
After-hours trading doesn’t play a role in the way we trade, the action is interesting, but it really doesn’t play a large part in our decision making. There are always exceptions to the rule, where if a stock gaps up or down more than 10% may play a role, but most of the time it simply doesn’t trigger us to act one way or another. Often times we’ll see, like the case in Baidu where the stock may gap down and find its way higher signaling support. The day’s action is much more important than any movement after-hours.
Tomorrow brings another option expiry and we’ll certainly see an increase in volume. Not all options expiry inflates volume, but we have certainly bare witness to the recent options expiry inflating volume. While volume will more than likely swell it’ll be important to see how price and volume act. March’s quadruple witching had price action fall apart as the day wore on, but the volume came in at the beginning of the day and it fell off a cliff showing institutions after the first 3omins weren’t out selling stock. If we do see a similar price pattern with the last expiry, but this time we get volume along with leaders falling apart it will more than likely signal the market is rolling over.
There are just too many strong stocks out there at the moment that are signaling the market is about to roll over in the near future. We’ll certainly see the market pull back and close lower, but there isn’t anything flashing SELL signals. Certainly take profits when a stock warrants taking profits and most definitely cut your losses.
Will this market pullback, yes and we’ll be on top of it when it decides to pull back.
