The markets rally off the days low to close just off the highs of the day as volume races higher. The day did not start off out too well with the market moving lower. However, a better than expected jump in consumer confidence boosted the market pushing stocks to their highs of the day. From eleven o’clock on the market bounced between the highs and lows of the day until the final hour of trading. At the close stocks were able to close just above yesterday’s close with volume running hot. For the second day in a row the market has been able to find buyers, but lagging stocks are the ones supporting the market.
The obvious positive for the market is its resilancy to fend off sellers and avoid a nasty roll-over. The downside is laggard stocks like CSCO are helping the market out. AAPL did do its part today continuing its rebound from last week’s sell-off. It has retraced more than half of last week’s move, but volume has been slightly disappointing. CSCO on the other hand is trying to rebound from its atrocious showing after its last quarterly earnings report. It is due out in with earnings on the 9th of February.
Tonights “State of the Union Speech” will certainly have the attention from Wall Street as President Obama will try to shift towards being pro-free market economy. Cutting spending and lower corporate and individual taxes will certainly be a highlight of the speech, but the real question will be whether or not Democrats in the Senate will go along with an overhaul of the US Tax code. Trying to decipher how the market will react here will only leave you spinning. Use the price and volume action of the market to guide your decision making. In the end, price matters most.
Looking ahead we’ll need to see a resurgance in leading stocks once again. Laggard stocks at the moment are keeping this market afloat while leading stocks like FFIV, VMW, RVBD, INFA, FOSL continue to undergo corrections. While the odds of a correction still remain high, we could be seeing a roll over from leading stocks into laggards before this market has a real correction. Again, let price action dictate your movements rather than you feelings and opinions.
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