It remains to be seen whether or not today was the start of a new uptrend or not. Volume wasn’t overwhelming, but after the Federal Reserve rate announcement it would have taken quite a bit of turnover to surpass yesterday’s volume. Earnings continue to poor in and for the most part have been to the positive side. Of course AAPL is the exception. GDP print came in as expected and we did see jobless claims disappoint. Pending home sales for the month of December disappointed in a big way. Homebuilders who started the day mostly gave up all of their gains after pending home sales figure was released. While we saw a strong day of price gains we did see sellers pile in at the close. The market remains in limbo and the key area to watch is yesterday’s low.
We were in short-term oversold territory and today’s bounce really does not come as a surprise to us. Tomorrow is the last day of the month for January trade and given the selling we have seen this month it would not surprise us to see some sort of “window dressing” to ease the pain. There are so many shenanigans taking place the moves in the market really do not surprise us. However, it does not mean we won’t be prepared. Yesterday’s low is a key point as well is the December lows. For now, December lows have held and have become a level to watch.
Sentiment did not change too much this week as we have seen in the past. Normally, when the stock market moves lower sentiment will swing violently to the bears’ side. This week, while we saw a shift it wasn’t as dramatic as in the past. AAII Bulls dipped to 32% and Bears jumped to 33%. NAAIM survey saw the most bearish bet at -125% pulling the overall sentiment figure to 70.94. Mind you the index has not seen sub 90s since the end of November. II survey remains quite bullish with the number of bulls registering at 53% and bears only at 15%. Given we did not see a stampede to the bear side doesn’t mean this market cannot go on and make new highs. Perhaps we have begun to see a shift in sentiment where the rush to the bear side is a thing of the past.
This market is not out of the woods just yet, but today was at least day one of a new rally attempt. If we had been able to see volume and a better close today would have been a better sign a new uptrend will form. Stick with the plan. Make sure you get out and enjoy the weekend.
