The market started with the New Year with selling for the first time since 2008. Last year we saw the market gap up more than 2% at the start of the day, but we weren’t able to repeat the same vigor. Volume jumped on the session as it normally does on the first day of the month giving notching another day of distribution. The market did try to lift at the close after setting lows around 2pm EST. However, sellers were just too strong and erased decent gains at the close. Distribution days have piled up here and on the flip side we saw some good moves in our leaders. Who will win out? Time will tell and we’ll be there to follow the moves.
Quite a few names we are follow moved up nicely today. TWTR, BAC, YY, and SCTY are just a few names we followed moved nicely. Now, BAC is not a prototypical growth stock that will move 100% or more. With that said, we can still see BAC produce a burst of 20-30% in gains in a few weeks where we can take advantage of the move. Although we prefer to climb aboard a stock that has the potential to double or more we are in an environment where these are few and far between. If we get a signal we will go with it. No need to discriminate at this point in the game.
Our hedges worked nicely today as we come off the most recent highs. We are in a pretty obvious channel and adding hedges at the upper band has been profitable so far. We aren’t about to get married to the downside here, but we aren’t going to ignore it either. Distribution is in an area where we are slightly concerned and we’ll react accordingly. Do not ignore sell signals either just because you are overly bullish. Same goes on the opposite side of the market. Just because you are overly bearish you simply cannot ignore buy signals. Opinions are useless in this market.
Let’s see how this market closes up this holiday shortened week! Have a great weekend.
