US Dollar Index hits new lows
Gains were plentiful, but stocks finished off their highs as volume finished light. Volume was below average across the board and despite Friday’s options expiration volume was considerably lower. Without volume today’s action was not a follow-through day even with all the price gains. Remember, last week we had seen the market dive lower on the fears from Japan. Sentiment took a dive and the market was oversold. Today’s rise, on Meltup Monday is not a surprise, but if we want to have this market go higher we need to see a powerful move and today was not it.
Today’s move cleared any short-term oversold conditions there might have been. Thursday and Friday’s action was not inspiring and today’s was no different. If volume had been above the 50 day moving average we may have a different outlook on the market. One big mistake is if we do follow-through over the next few days thinking you missed out on a big move. We’ll have plenty of time to make up any ground on the market if this market is to continue higher. Do not try and chase the market simply because you feel like you are going to be left behind.
Two key indexes, the NASDAQ and S&P 500 are still below their respected 50 day moving average. A key level that many overlook, but is a very important moving average. The S&P 500 was rejected right at the level today. On the other hand, the NASDAQ remains quite a bit below its 50 day moving average. Do not get sucked into the CNBC syndrome of thinking you need to be in the market ALL THE TIME. The best of all time knew when to in the market and when they should step aside. Standing on the sidelines, staying patient, prudent will serve us well over the long haul. Trying to jump in and out timing the market will only churn our accounts lower.
The next few days will be interesting as the S&P 500 will be flirting with its 50 day moving average. If the stock is unable to pierce this important level and with force it wil be indicative of where this market is going. Another interesting development is the US Dollar Index hitting multi-year lows! Perhaps the market got a boost from the falling dollar, but in the long-term this is a terrible development. This is another area to watch.
Stay prudent and always, cut your losses fast!
