Volume slips across the board
If we do end up getting a follow-through day we’ll look back at today as constructive action. Today was constructive, lower volume on the pullback and price action was not destructive. The market remains in a dicey situation here, as we could go either way. Again, if we are to move higher from here today was a good, not great day. Slight disappoints from the release of House Price Index and Richmond Fed Manufacturing index, but neither did much to sway traders from pushing stocks higher or lower. Outside of the economic releases, the financial media focused on wireless companies and the merger between AT&T and T-Mobile. Ignoring the nonsense from the media; today was just constructive for bulls and frustrating for bears.
The move off the lows has been quite V-ish and it would be prudent for the market to work off the move from the lows. Today was technically day number four of an attempted rally. Remember, the strongest rallies will show a follow-through day between day three and seven. There are certainly excpetions to the rule and we can be lenient and say even a follow-through day on the tenth day is acceptable. However, any move below last Wednesay’s low would kill the current rally attempt. As I stated in last night’s commentary if we do have a follow-through day this week do not worry about missing a portion of the rally. You will be able to make up the difference by concentrating on the market leaders.
At this point, we are indifferent to the market direction and have been. The best setups come after a market correction of more than 3 months and a depth of at least 20%. Could we rip higher here, sure, but the probability of finding big winners (100% and above in a matter of a month or two) remain slim. We’ll take what the market gives us and we aren’t going to “guess” what the market will do next. Stay disciplined and avoid thinking you know where the market is headed next.
Today was a decent day, but we’ll need to see the action remain constructive for this to continue. It is concerning the NASDAQ remains well below its 50 day moving average, but that can change with strong price action. Do not anticipate the NASDAQ will get strong action. Sellers could very well return and push this market lower. We want to see this market prove its worth then we’ll take advantage and if it doesn’t we’ll jump onto shorts.
Cut your darn losses short!
