Volume drops, but stocks find buyers
Positive economic data helps stocks push higher, but volume lags as institutions weren’t in a hurry to jump back into the market. Better than expected Personal Income as well as positive Chicago Purchasing Manager helped push stocks out the gate. The market ignored the crisis in Egypt even as the sellers gained momentum shortly after the open. Even a late day blip the market was able to find buyers pushing the NASDAQ back above 2700 level. Melt-up Monday has proven its worth once again as stocks close in the green.
There wasn’t much umph to today’s action and volume proves the lack of conviction from institutions. However, there is something to be said about the first day of the month. Looking back, the first trading day of the month has been a successful endeavor if you were long the prior day. Now, this is no way to invest, but something we should be aware of. Odds are in favor of another positive day tomorrow, but then again in the short-term anything is possible. Stick to the price action of individual stocks and lead the guess work to gamblers.
There has been a lot of “top calling” over the past few weeks with the market appearing to be rolling over. At some point this heavy volume selling and light volume rebounds will catch up to the market and send the market into correction mode. However, trying to guess the precise top will only lead you to churn your account. We are going to wait for the proper signal to short prior to guessing a stock will move lower. Waiting for the proper moment, put the odds in our favor will yield us great success in the market.
The Best Stock Market Tips are simply ones you do not take. Jesse Livermore is famous for saying Tips are for waiters, not traders. I have been approached and asked for stock market tips and I politely let them know I do not have one. The fact of the matter is stock tips are for those who do not want to put the work in to be successful stock speculator. At Big Wave Trading we aren’t here to give you a tip, but are here to make you a better trader!
Stick with the price and volume action of stocks and ignore all the other noise. And always cut your losses short.
