SIDENOTE: THERE IS A TROPICAL STORM HITTING HAWAII (OAHU, MAUI, KAUAI, MOLOKAI, LANAI, BIG ISLAND) THAT WAS HURRICANE FELICIA AND IT IS ALWAYS POSSIBLE THAT THE RAIN OR WIND WILL KNOCK OUT POWER. IF BY SOME CHANCE POWER IS KNOCKED OUT YOU WILL NOT SEE THE NEW LONGS/SHORTS POSTED LIKE THEY NORMALLY ARE. I DON’T EXPECT THAT TO HAPPEN AS THE WINDS HAVE FALLEN FROM 140 MPH TO 45 MPH AND MIGHT BE LOWER WHEN IT HITS THE ISLAND BUT THE RAIN COULD DO SOME DAMAGE. PLATINUM MEMBERS WILL KNOW FIRST AS YOU WILL SEE ME LOG OUT OF THE CHAT ROOM. I ALWAYS STAY LOGGED ON SO IF YOU SEE THAT HAPPEN YOU KNOW SOMETHING HAPPENED. ALOHA.
Following up Friday’s gains the market pulled back on lighter volume in front of Wednesday’s Federal Open Market Committee’s rate decision. The day saw a few leading stocks flex their muscles while losers weren’t crushed. Any time the market books solid gains and pulls back you want to see it pull back on light volume and leaders show some strength. The light volume shows the big instutional players were simply staying on the sidelines for the most part, but were active in leading stocks. Monday’s session was a very nice day as the market was able to consolidate its recent gains.
The lack of volume today shows the hesitancy towards investors ahead of the FOMC rate decision. There are grumblings the FOMC will begin to raise the Fed Funds target rate which is perceived as a negative. Although, in the long run the action would be healthy just highly unlikely as they will not want to disrupt the market just yet. With that said, anything is possible and the action fo the market will give clues as to where this market is heading. At the moment, the recent consolidation and lack of distribution is certainly foreshadowing a market that wants to move higher.
Here are some interesting stats from todays market:
NYSE:
Advancing Shares: 3,359,888,300
Declining Shares: 2,222,190,400
New Highs: 207
New Lows: 2
NASDAQ:
Advancing Shares: 926,443,100
Declining Shares: 849,805,300
New Highs: 65
New Lows: 5
These numbers are positive, especially on a day where major indexes were lower on the day. It continues to underpin this market has some strength. This market has been a difficult one to navigate and has many scratching their heads because what is running doesn’t appear to be quality. There have been very nice gains had, but they aren’t the gains we normally see during bull markets. I want to remind you that TASR’s run began 7 months after the market bottom in 2003.
One danger that may be tempting to many is buying a stock extended from an ideal pivot point. There are a few stocks that come to mind when I say “extended from an ideal pivot.” I am sure many traders are simply blinded by the moves of these stocks and will simply buy them. It may or may not work out but time and time again history has proven this strategy to be deadly. There is one pattern that has been proven to get you into a leader that has gapped open, but it does not form very often and if it fails it bring down a stock in a hurry. Remember, blindly buying without regard to ideal pivot points will only cause your trading capital to evaporate quickly.
I would expect the market to rinse and repeat todays action as traders will simply stay on the sidelines waiting for the FOMC rate decision Wednesday at 2pmEDT. What I will be watching is how recent leaders act, I am really looking for the leaders to take charge and buck the trend of the overall market. Always keep your losses short!
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