Another roller coaster ride for the market’s today as Crude Oil dipped below $30 during the session. NYSE volume ran hot day over day, but fell on the NASDAQ. The NASDAQ 100 index led all market indexes and recorded back to back days of gains. The good news for the market is we were able to hold yesterday’s low and our rally attempt remains intact. Make no mistake it still looks quite bleak out there. CHUY worked right away, but it’s the only stock acting well. At this point, given earnings season is on our doorstep it is risky to jump in ahead of any release. Today’s rally is certainly a positive sign, but it is really the only one. Small caps continue to lag well behind the broader market. Even breadth on the NASDAQ was split nearly evenly across winners and losers. Nothing is screaming we are set to rallying making new highs.
What was interesting to see today was the lack of fear in the market. The VIX index was in the red for the entire session even when the Dow erased 100 point gain from the open. This market is complacent and there are no two bones about it. The damage done since the end of December is going to hold this market hostage for a bit. Sure, there will be quick rallies here and there. However, to think we are going to rip new highs from here is a long shot. Odds are not in our favor. We will find opportunities, but they are likely to be few and far between. If we get signals, we’ll execute. Given the complacency and lack of strong leadership it is likely we’ll see a tough market for the time being.
Bonds rallied today pushing yields lower. A good tracking ETF TLT did close off its high, but saw some volume come into the ETF throughout the session. Perhaps the deflationary story is beginning to pick up steam helping the long and of the curve. This is something to watch over the next few weeks.
It was nice to see the NASDAQ Composite index finally break its current losing streak. It would have been nice to see some sort of capitulation trade in the market like we saw on 8/24. Or maybe it would be too easy to have had a washout. We are in day two in the current rally attempt. We are looking for strong price gains with volume to confirm a new market rally. Odds are not favoring a confirmed rally attempt, but you never know or as they say “it’s why you play the game.”
Good luck out there and remember to control risk through position sizes and exits.
