The week of options expiry usually is witness to institutional activity and the volume we saw today was certain indicative of institutions stepping up in the market. While CNBC focused on the trade balance, or what we should call “trade in-balance” the price action coupled with volume action was very telling today. As the market bolted for the lows of the day we once again saw support at the lows. Volume raced higher throughout the day as the market moved off its lows. The NASDAQ moved more than 20pts off its low hitting a new 52 week high on massive volume. Today was another indication this uptrend is healthy and will continue to be for the near future.
After the bell Intel posted better than expected earnings, sales, and guided higher for the second quarter. Intel had beaten earnings expectations that were already “high” and is leaving some to question those who believe earnings season will bring on a correction. We did see in mid-January the market begin to roll over as leadership weakened after 4th quarter earnings season took hold. Many now are predicting the release of first quarter earnings to do the same. However, there is one distinct difference between January and April and that is leadership isn’t rolling over. In fact, we are seeing support and new highs with our leaders and that isn’t bearish like January. We could at any moment change the character of this market and have leaders begin to break down, but at the moment we aren’t seeing it. Anticipation of a move is gambling and will leave you behind the eight ball.
Although this market appears to be overbought because it appears “high” the fact remains we continue to have stocks acting well. Even today’s dip still had plenty of our stocks holding up well. While we didn’t explode higher, this market was able to bounce back from what appeared to be heavy volume selling. The rally intraday simply stated that it wasn’t so much selling, but institution buying that was supporting stocks.
At some point we’ll get a correction, but our leading stocks, the ones we go long will certainly give us an early indication of where the market is headed. We will avoid trying to outsmart the market and pick a top. But, we’ll pay attention to the signals our leaders give us and take it from there. The market simply doesn’t care about what you or any pundit on CNBC or Bloomberg thinks. It will move in either direction with or without you and once you are able to decouple your ego from trading the better your results will become.
Stay disciplined!
