A positive Durable Goods report help set the tone for early morning trading. Buyers quickly rushed in and scooped up shares, but the early morning cheer quickly faded heading into the late morning hours. As the NASDAQ reached last week’s gap it was an obvious place for sellers to step in and knock the market down. Not to be out-down buyers took the reigns and propelled the market back to the highs of the day by the close. One item lacking was volume meaning institutions were not involved in the market today raising a few cautionary flags on the validity of the move. Regardless, today’s price action was solid just lacking the oomph we’d like to see.
Gold was absolutely hammered today on big time volume suggesting the recent move is likely to be done for awhile. After a great run you would like to see the consolidation happen under light volume and small pullbacks. What we are seeing out of gold is something much different. Subsequently, our recent leadership involving gold and silver stocks took big time hits as well. The last time this occurred was in the spring of 2008 where we saw many commodity names, including gold stocks lead and collapse. While this isn’t likely to be precisely like 2008, it could be a shot across the bow of trouble ahead. Regardless, the price and volume action is speaking LOUDLY to cut your losses and run. It would be wise to do so.
Leadership continues to remain thin and uninspiring to say the least. We do have a few leaders adding to yesterday’s gains, but the miniscule number of leaders is very troubling. This market can push higher from here, but for a new uptrend the lack of leadership and upside volume is very telling. Without accumulation, institutional buying and leaders this rally is doomed before it even got started. Be careful out there and do not feel the need to be a hero and get long stocks simply because we have had the straight days of gains.
Stay prudent and always cut your losses short.
