Stocks shake off early morning selling to close just off the highs of the session. After yesterday’s negative reversal on high volume stocks recovered today even as sellers took to the market during the early part of the morning. Volume fell across the board, but yesterday’s volume in Citigroup has muddied the waters in terms of NYSE volume. On the NASDAQ volume fell after yesterday’s big jump in volume. Stocks were able to close just off the highs of the session putting a bullish spin on the day’s session.
For the sixth straight session the NASDAQ has closed in positive territory. Constructive consolidation would be for the index to pull back in light volume while market leaders holding steady. The market doesn’t move in straight lines and it would benefit us greatly to see the market undergo a normal pull back or a natural reaction to the recent run-up.
The equity put/call ratio, something we have avoided to talk about for quite awhile closed the day at .50. Usually this is a signal of complacency and will bring on a bit of selling. But, yesterday’s equity put/call finished below .50 at .47. Call volumes have been through the roof as bullish bets have been placed on equities. So far, the index has proven very little in terms of nailing a top, but it does highlight the bullishness in the market.
Tomorrow’s release of the AAII sentiment index will certainly shed some light on what investors are looking from the market over the next 6 months. Last week bulls came in a shade under 50% even as the market corrected from the early November highs. It would not surprise me to see the bulls jump over 50% and challenge the bullishness we witnessed back in early November. The bulls continue to win out over the bears, but it is much more valuable to us to remain focused on our holdings and the action of the market.
The market over the next few days will need to avoid any further stalling or distribution to stay afloat. Any further days of stalling or distribution will be a signal of further deterioration of the market. Pay attention to your stocks as they are the ones will giving you the signals of where this market is headed.
Always cut your losses short.
