A plunge in new home sales did provide a bit of selling, but buyers found themselves scooping up shares. The huge drop in new home sales should not come as a surprise, there continues to be a glut of homes and until supply is absorbed. Volume rose across the board, but failed to eclipse the 50 day volume moving average. On the positive side there were a few market leaders breaking to the upside. However, we still do not have a confirmed rally and both the S&P 500 and NASDAQ remain below a key level the 50 day moving average. Today was certainly a positive day, but we’ll need to see this market continue constructive action and a follow-through day.
At Today’s low it appeared as if sellers had complete control over the market. Volume had begun to creep higher as sellers piled on, but it wasn’t before long buyers were able to push the NASDAQ back to the open. The intraday rally wasn’t as powerful, meaning volume wasn’t overly impressive as I would have liked, but still a positive development for this attempted rally. Continue to stay patient, there is no need to RUSH back into the market. If we do get a follow-through day, we’ll be able to take advantage of fresh breakouts because we locked in gains and stayed in cash.
AAPL stock remains weak as the stock remains below its 50 day moving average. A strong move to retake the important level would be a signal, institutional players are willing to buy the stock again, but until that time it appears to be dead money. On the other hand, BIDU stock and NFLX stock continue to act well despite the overall market being weak over the past 4 weeks. Perhaps we have the makings of a new confirmed rally even with a short pullback of just 4 weeks. Last year we saw a similar move after a correction of just 3 weeks from the end of January into the first of February. Anything is possible, but being cash heavy has us prepared for whatever this market will throw at us.
Stay prudent and if you do take long or short positions here, cut your darn losses short. Stock market trading takes discipline, practice it!
