Late day headlines regarding the current Eurozone situation fail to inspire and sellers take to the market pushing stocks to the lows of the session. Volume rose on the day, but once again was below the 50 day average volume. Institutions weren’t out in full force selling down shares of stock, but volume did jump 10% on the NASDAQ. Losses weren’t too hefty until the end of the day when sellers really took to the market and slammed stocks lower. Today’s session really put a damper on the ability for this market to give traders and investors a Santa Claus rally.
The choppiness we have experience in the last few months is quite impressive. Not that it is healthy, but it is quite extraordinary to see the amazing swings in this market. So many v-shaped moves by indexes and individual stocks it is hard to fathom this can last much longer. At some point we’ll get a big trend in either direction. It really is anyone’s guess, an opinion where we go from here. Trend following doesn’t care about opinions and neither does the market. Who cares whether or not this market can take another round of QE, we just care about being on the ride side of the trade.
Financials took a hit today with the XLF – SPDR Financial ETF losing .50 on the day. Volume wasn’t above average, but not by much (-3% off the average). And while the ETF is hanging onto the 50 day moving average a push thru this moving average with above average trade is something to watch out for. A positive sign was the SMH tracking semi-conductor stocks. Volume was lower on the day and 37% below average volume. It too hangs above the 50 day average and is one to watch out for over the next few trading sessions. We have yet to see a follow-through day confirming a market rally. Tomorrow is day 10 of this most recent attempt and it would be a strong signal for the market to confirm a rally.
Opinions and your actions with your trading account should be separate. For example, I have zero faith the European political leaders can solve their debt issues. Sure a monkey can print more money, but to really solve the issue there needs to be a balanced budget and a plan to pay off existing debt. Even debt liquidation would be an alternative solution. Political leaders do their best to protect the status quo rather than do what is right. Therefore, perhaps they get the ECB to print more Euros, but in the end simply printing Euros does not solve the underlying issue. The bottom line is do not trade off your opinion.
Have a great weekend and we’ll see you back here next week!
