A disappointing ADP Employment report, but a slightly better than expected ISM non-manufacturing figure sparked a wild ride in the markets. Selling got started just before the ISM non-manufacturing figure was released and while a short pop followed the number sellers would take over. Monday’s low was easily sliced through as the NASDAQ and Russell 2000 lead the entire market lower. We would find support, but not a high volume reversal we have seen meaningful bottoms put in place. By the end of the day while the markets were off the lows the market was simply unable to close near the highs of the session. Volume was lower on the NYSE and flat on the NASDAQ. We remain in a downtrend and will continue to follow our process.
In after-hours there were stark contrast with their moves after reporting earnings. GMCR reported earnings and KO taking a 10% stake in the company. The stock soared up more than 60% at one point settling up 45%. On the other hand we saw TWTR move up nearly 10% after earnings only to fade and fall flat on its face. At the close of the after-hour session TWTR was down nearly 18%. Other notable name pushing higher was AKAM. Big moves after earnings surpass our threshold of buyable earnings gap moves.
We continue to inch closer to Friday’s job report and numerous pundits exclaiming they know where the markets are going next. Tom Demark has called for a potential a drop of the S&P 500 to 1100 and in a hurry. Just in time for Friday’s job report. Others continue to be dip buyers trying to pick a bottom in this market. So far, it has yet to pan out for them. A move above today’s high could put the odds in the favor of those who bought today’s dip. The one thing dip buyers never explain is when the dip is over and it is time to buy. How much do you buy? I just never see this explained. We follow a simple, yet effective trend following strategy and can ignore this nonsense spewed from the financial media.
This market is still in a downtrend and we’ll continue to stick with this trend until it turns. Stay with your winners and Big Wave Trading.
