Welcome back from a long weekend. Stocks cheered the return of the market after having Monday off. The NASDAQ was certainly excited to be back as the index soared more than 2.7% as volume jumped double digits. Volume was below its 50 day volume average. The Dow was up nearly 400 points. A confirmed rally certainly is a good sign, but it is far from a guarantee we push back into new highs. VIX was down 10% as fears subside over a global meltdown. Given the next big story is the FOMC meeting on the 17th the next few trading sessions will be interesting. A good start let’s see how we progress forward.
The NASDAQ is the only major index not to have seen the 50 day under the 200 day moving average. Most likely the death-cross will happen over the next few days. The death-cross is not entirely reliable indicator, but swoons have come after the cross occurs. Will September usher in one more swoon before we are able to resume an uptrend?
A potential problem is one of our leading stocks: NFLX. NFLX has had a tough time as of late and today was no different. The stock has undergone a lot of distribution over the past few weeks and appears to be holding on by a thread. Today’s outside reversal on more than twice its 50 day volume average suggests big institutional holders are selling the stock. The Friday before the August dump was a sell signal to get out and since then has tumbled a ways. It pays to have an exit strategy. If we begin to see other stocks like NFLX ie AMZN it will be a warning sign this market is not ready for prime time just yet.
Welcome back from a long weekend! We hope you had a safe and enjoyable Labor Day weekend. For most of the US it ends, unofficially summer. On Maui, it is summer year round! Waves are pumping still and this market continues to sort itself out.
