Heavy snow blankets the east coast, but fails to keep stocks at the lows
Traders in New York woke up to a huge pile of snow and a rate hike by the Chinese from Christmas day. Volume after the Christmas weekend was lower and was expected. It is not a secret traders take the week off and today’s action was just highlighted traders were off. Many travel stocks were hit as travel plans were hit hard by the blizzard. A few other leaders took to their 50 day moving averages, all in light volume, but it is never a good thing to see a few leaders taking to their 50 day moving average. Buyers took to the market and scooped up shares pushing the NASDAQ and S&P 500 into positive territory. Not a perfect day, but it was a positive signal to see the market push off the lows and close green.
The NASDAQ took to its 10 day moving average early in the trading session as it appeared sellers were going to rule the roost. PCLN and EXPE experienced selling as traders anticipated a negative impact to the travel misery many travelers are experiencing in the Northeast. NFLX another leader saw sellers hit the stock after a negative article in Barrons over the weekend. Barrons stated the short sellers in NFLX were going to be “right.” Barrons is notoriously bad at timing “tops” and “bottoms.” The stock is at its 5o day moving average, but it too got support at the end of the day with buyers supporting the stock. A collapse through the 50dma would certainly be a bad sign for the stock, but it is hanging tough. Despite some selling, the NASDAQ held up along with a few of its leading stocks.
CSCO is certainly not a leader, but it did make a comeback today helping the NASDAQ out tremendously. The stock has been beaten up badly and today’s move is a nice signal, but the stock does not have the potential to move more than 50 to 100% or more over the next 3-6 months. We like to find stocks looking to push 100% or more rather than stocks looking to move 10-20% in a clip. There are tell tail signs of stocks with potential to make powerful moves and we continue to find these stocks.
The Santa Claus rally is certainly here and will likely manifest a few percentage points in gains on the indexes. Volume will continue to be light until the new year. At some point the market will have to deal with the overzealous nature of stock market bulls. Sentiment continues to run super hot and we’ll see this market snap back and correct. Will you be able to spot the turn and protect your profits? Pay attention to if the market begins to stall and spit out distribution days.
Always cut your losses short!
