Traders get whipsawed as stocks digest earnings reports
A roller coaster day for the market as stocks finish in the green, but coming back after sellers took to the market. The NASDAQ hit a wall just after eleven am today falling to its lows by two o’clock. Today’s roll over was not pretty during the intraday, but the late day surge did help ease the pain. The market over the past few trading sessions has been quite unstable especially after AAPL and IBM earnings. We did however avoid a day of distribution, but the resistance we’ve been up against appears to have a strong hold on the market.
Today’s intraday action is not something you want to see in an uptrend. While it would have been easy to throw in the towel at 1pm as stocks looked like they were about to collapse, but the market held up. The 10/13 gap has held and while odds are likely the gap will be filled it has so far held. Today’s lows we did see a fair amount of support. Even Tuesday when the market took a swan dive buyers were willing to step up and buy up stock.
Bullishness continues to run rampant with the AAII Investors. Although bulls came in under 50%, the 49% bullishness is quite high. For awhile now we have seen the number of bulls stay above 40% for quite some time. Bears now only make up 25% of the AAII Investor Sentiment survey. To many this may appear to be a topping signal, but sentiment can work in funny ways. If we were reaching new highs, then the level of bullishness would be a red flag. Couple that with four or five distribution days with faulty leadership we would have something and begin to be more vigilant. However, we simply do not have the case and we continue to remain in an uptrend.
More earnings releases and fun in after-hours trading as a few big name leaders reported quarterly earnings. BIDU and RVBD were two notable winners with RVBD taking the cake jumping to over $51 a share. BIDU on the other initially moved lower by 5%, but was able to find its footing to close in the green at the close of after-hours trading. AMZN on the other hand missed and fell in after-hours trading. However, this past July the stock was able to bounce back from heavy losses in the morning. It is anyone’s guess to how the stock will act tomorrow, but if it mirrors the same reaction it would signal buyers are willing to support the stock.
Again, this market has very little distribution and while this week has been shaky we still remain in an uptrend. We needed this market to take a breather and consolidate its gains and so far we are witnessing the consolidation. Stay focused on your stocks as they are your clue to this market. And as always, CUT YOUR LOSSES.
