The NASDAQ rebounds from recent selling while NYSE indexes fall in light trade
Jobless claims dropped much more than expected fueling futures to rally off session lows and power a buying surge at the open. Buying continued to about 10:30 when the buying interest began to fade. Volume was running lower through the day and it was noticable on the rise during the morning part of the session. Early afternoon trading brought the NASDAQ to the lows of the session, but support quickly took hold pushing the market back to the morning highs of the day. But, the star of the day was the action in crude oil as the commodity erased its gains and fell to the lows of the session. A mediocre day with support at the 50 day moving average for the NASDAQ and despite the fall in crude the lack of push by the market is very telling here.
Perhaps a surprise the number of Bulls dropped from lofty levels to 37% while the Bears jumped to 36%. It has been awhile since the number of Bulls were in the 30s. The last time was on September the 2nd the day after we saw the market follow through on big price gains and volume. Remember, Big Wave Trading was on top of the market rally beginning of September. We even notified all previous members of the coming rally and gave them a discount to take advantage of a great opportnity to make money.
Any resemblence of overbought conditions brought on by the rally since September and more recent from the January shake out is over. With the NASDAQ sitting with 5 distribution days and on its 50dma it will be interesting to see if the market can regain its composure and move higher. But, given where we are within this bull market it isn’t unconceivable we see the market under go a deep correction. While we aren’t likely to see a 50% drop like in 2008 a more notable 20% correction is most likely. Whatever we may think will happen may not and we must react to price and volume action.
Tomorrow’s highlight will be the GDP report out at 8:30 am EST. The circus of analysis to follow will only please those who need entertainment. To be extraordinary stock market traders ignoring the noise from CNBC and the like is paramount! Stick with leading stocks!
Cut your losses and enjoy the weekend.
