Stocks rebound on light volume after Monday’s heavy volume decline
Facebook released news it would begin streaming movies from the site as another entry into NFLX stock’s neighborhood sent the stock lower. The decline did not stop the Russell 2000 from gaining over 1.5% on the day leading all exchanges while the Dow lead all major indexes. Financial stocks lead the way with industrial stocks not far behind. Lagging on the day were technology stocks as they continue to face mounting selling pressure and perhaps foreshadowing further market troubles. Crude oil’s decline helped ease traders’ concerns as the commodity lost .64% on the day. A major disappointment on the day was volume as it came in under yesterday’s level suggesting buyers weren’t rushing back in to save stocks. This market is on shaky ground and is best to keep a defensive posture.
Tomorrow marks the two year anniversary of the current bull market. It is hard to believe we have come such a long way after the 2008-2009 near deadly bear market. Since then, we have seen mid-cap stocks regain their 2007 highs with the NASDAQ knocking on the door of its own 2007 high. Ben Bernanke and crew have been flooding the market with liquidity to keep asset prices high, but it has come at a cost. It is great we have had this bull market, but commodities are now racing higher and squeezing the middle and lower income families. Rather than prosecute those who took on the massive overleverage and risks we have doomed the lower income families to high inflation. I digress, 24 months of a bull market is very long in the tooth without a prolonged correction and we could be witness the start of another deeper correction.
IBD finally came around and dubed the current market condition as “in correction.” It certainly appears as if the market is simply working off oversold conditions created recently before making another break to the downside. Anything is possible, but given the lack of umph from AAPL stock and NFLX’s decline something does not appear to be right in this market. A few market leaders like DECK and CMG have struggled after breaking out, a sign of an unhealthy market. Signs are not pointing to another big run up in the market and it is wise to stay defensive. Cash is a great place to be, keep that powder dry for better opportunities ahead.
