The day got off to a great start as the NASDAQ was able to move higher.  However, sellers worked themselves into the market knocking off market leaders just at the eleven o’clock hour.  It appeared as if the market was about to put in a nasty outside reversal day, but Tuesday’s low held avoiding a potentially very NEGATIVE situation.  Volume rose across the board and ran higher throughout the day giving the impression institutions were stepping up their operations in the market.  Today gave the impression of stalling action despite ending near the mid-point of the day.  Given the action amongst some leading stocks and the overall market action a bit of caution is warnted to here.

Today was not your prototypical “stall day,” but given the inability for the NASDAQ to remain above 2800 it certainly was.  Last Friday we saw the market put in a stall day making two in total.  While this is nothing to worry about YET we’ll have to become more defensive if we begin to see a few days of distriubtion and/or more stalling.  Another clue will be whether or not the current crop of leading stocks holds up and if breakouts begin to fail.  Pay close attention!

While the dollar index is not highly correlated in my opinion to the stock market the action recently certainly has raised some concerns.  The general thinking is a falling dollar is supportive of higher equity prices.  However, looking at the chart this does not hold true and is a terrible way to approach stock market trading.  It will be interesting, if the index takes out its most recent low as it is a key multi-year pivotal point.  Sellers will likely pile on as this key point is crossed setting up a potential bottom in the index.  We’ll see if it holds true, but it will have ripple effects across the markets.

We continue to be at an overbought level as the market continues to digest its recent move off the low.  Being overbought is somewhat meaningless if this market can either consolidate in a tight range or just continue moving higher.  However, any hint of stocks failing breakouts and distribution in the major indexes will signal churning and a high probability of this current rally failing. 

Our job is not to predict where the market will be an hour, a day, a week from now.  Our job is to take our proper entry and exit signals from the market.  Otherwise, it is simply guessing and the probabilities of being right and right big are drastically cut if we guess in this market. 

Once again, AAPL stock continues to weigh on the entire market.  Despite the NASDAQ cutting its weighting the effect the stock has on the entire market remains immense.  The market has been able to do with out the help of GOOG stock, but without AAPL stock it will be increasingly difficult to push the NASDAQ much higher than it is. 

Stick to your game plan and always cut your losses short!