Stocks end lower, but a last minute rally saves the market from closing on its lows
Distribution hits the market as the dollar rallies and stocks fall. Volume rose across the board from Monday’s level. Selling accelerated late in the day as the dollar continued its rally from the end of last week. Last minute buying pushed the market off its lows of the session, but was unable to save the market from a day of distribution. Gold and silver fell as the dollar rallied hard, but a reaction to the recent moves in the metals is to be expected. Today was not a great day for the market, but it is only one day and we’ll need to see the market to show some resilience in the coming days.
The gut reaction of many would be to see this day as the top in the market and the Doug Kass’ of the world are correct. Today’s move in perspective gave the NASDAQ its first day of distribution. Remember, as an index rises 5% above a distribution day the distribution day is erased. With only ONE day of distribution today’s move is not at all concerning. Now, if this continues and we see leaders cracking then we’ll need to adjust accordingly.
Once again Priceline.com (PCLN) reported better than expected results pushing the stock higher. We saw in August a similar move in the stock and this time is no different. PCLN is a part of our market leadership and although leaders stayed in lock step with the market we have yet to see any red flags from leadership.
What we need to be aware of is one day does not make a market. It will take a bit more to take down this market. It is quite normal to have “pullbacks” and quite honestly a healthy 2-4% pullback would be healthy for this market as market sentiment continues to stay high. It would be helpful to see a few bulls get scared out of their positions. Today’s move, more than likely did not shake enough bulls out of their longs. Although looking at the late afternoon trading panic certainly did set in as the market moved lower. Many are trying to catch the “top” yet many will NEVER sell precisely at the top and miss out on bigger gains.
There are a lot of positives in this market to support higher prices. The market simply cannot move higher every day without a pullback. Cut your losses short!
