The ECB and Janet Yellen could not sway buyers into the market as another distribution day hits the market ahead of the November jobs report. Selling did not intensify until the afternoon as volume jumped on the NYSE. The NASDAQ volume did not eclipse yesterday’s level, but losses piled up. Small cap stocks as gauged by the Russell 2000 led the entire market lower. Today’s action has pushed our market model into neutral mode. No big surprise as the past two days have not been kind. We will act according to our model and not panic. This is not what bulls wanted, but not all is lost just yet. Stick to your game plan as we await tomorrow’s job report.
With the ECB out of the way we away tomorrow’s job report. It will be interesting to see how the market reacts to the number. We certainly hope the number is a blowout. Who doesn’t want a lot of jobs to have been created last month? Whatever the number is we will be waiting to see if the selling continues to accelerate. Stay patient and cut losses when necessary.
Sentiment continued to move towards neutral. AAII respondents who are neutral moved to nearly 50%. Bears dropped nearly 5% week over week to 21%. Bulls dropped 3% to 29%. Not overly bullish by any stretch, but the lack of bears is somewhat telling. Let’s not forget this survey is a bit behind and does not include Wednesday’s or Thursday’s action. NAAIM survey ended the week just at 68% long. We haven’t seen NAAIM Managers allocation rise above 80% in quite some time. Sure there are those who are 200% long, but on average managers are not overly bullish on equities.
Not a good picture from this market at this point in time. We cannot abandon our strategy over just two days. We have adjusted as our market model has changed. Have a great weekend.
