Mid-day Market & Model Update
Wednesday, March 21, 2012
Stocks are lower again this morning and there does not appear to be any specific catalyst for the decline. As such, we will chalk up the move to the things getting a little sloppy in front of the quarter’s end. As we’ve been saying for some time now, the market has run a long way over the past 16 weeks and the bulls are due to take a rest in here somewhere. Thus, a consolidation phase would seem to make sense at the present time.
However, given the impressive gains the bulls have put up during this run higher, we continue to believe that unless your time frame is short-term oriented, it is probably best to give the bulls the benefit of any doubt for a while longer yet.
Read more...Tuesday, March 20, 2012
Stocks are lower this morning on the back of a couple of reports that are creating some concerns about China’s growth rate. First, Chinese officials increased the price of gasoline and diesel fuel in order to keep pace with rising crude prices. And second, there was a report that the equivalent of Chinese “corporations” saw profits drop for a second consecutive month in January.
Given the extended nature of the current rally, we aren’t surprised to see the bears grasp at nearly any excuse to do some selling. And then the uber-fast money may decide to bail at the first sign of weakness. However, given that fund managers do not want to get caught with a large cash position at the end of this particular quarter, our view is that any downside may be limited at the present time.
Read more...Monday, March 19, 2012
Stocks are mixed this morning as traders await the next major market catalyst. The bulls argue that end-of-quarter window dressing coupled with dividend-oriented mutual fund managers scrambling to get into Apple and the fact that hedge funds have underperformed during this rally (can you say performance anxiety?) means that the indices are likely to remain elevated for another couple of weeks at a minimum.
However, the bear camp reminds us that this move is becoming overextended and that sentiment may be too optimistic at this stage. As such, our furry friends contend that a pullback to test support is in the cards.
Read more...Weekly Model Reading
Stocks enjoyed another strong outing last week and for a change all the major indices went in the same directions (the four major indices all sported gains in the same week for the first time in a month). The Dow snapped a two-week losing streak, though the S&P and NASDAQ have now been higher in five consecutive weeks.
It is worth noting that the S&P now stands at near-4-year highs, having closed above 1,400 on Thursday for the first time since June 2008 while the NASDAQ is now at its highest level since early 2000.
Read more...Friday, March 16, 2012
Stocks are waffling around breakeven today as traders sift through new data on the U.S. economy (CPI, Industrial Production/Capacity Utilization, and University of Michigan Consumer Sentiment). Also being factored into the trading equation today is the fact that it’s an options expiration Friday and the launch of the latest and greatest Apple product (traders have a tendency to sell into product launches).
While stocks are extended and overbought again, there is little doubt that the bulls remain large and in charge here. And as such, our models tell us to give the bulls a little room to work.
Read more...Thursday, March 15, 2012
With yet another batch of economic data that came in largely better than expected (Weekly Jobless Claims, Empire Manufacturing, PPI, Bloomberg Consumer Comfort, and Philly Fed), the bulls appear to be making another run at the 1400 level this morning.
However, the low level of the VIX reading and the recent spike in bond yields may be starting to give some traders pause. The bottom line is in light of the fact that this move has been a straight up affair and everyone knows that a pullback should commence at any moment, traders may seize any excuse to take profits these days.
Read more...Wednesday, March 14, 2012
Stocks are slightly higher today as European bourses are in the green again and Apple continues to romp. With the Dow and NASDAQ indices having vaulted above their respective big, round numbers (13K and 3K) for the first time in years yesterday, it appears that today the S&P is making a run at 1400.
So far at least, it appears that there are sell programs set to be run each time the S&P approaches the 1400 level. And why not, if you are a bear and you’ve been getting crushed for the past 16 weeks, it makes sense that you’d try to draw a line in the sand somewhere.
Read more...Tuesday, March 13, 2012
Stocks are movin’ on up again this morning as traders are feeling better about Europe and the data in the U.S. continues to suggest that the economy is growing at a steady clip. In addition, we are seeing some signs that the downturn in Europe may not be a severe as had been projected. Thus, some “upside discounting” may be in order.
With the major indices breaking to new highs for the current cycle, it is fairly safe to say that the bulls remain in charge at the present time. Thus, we are happy that our models have been able to keep us on the right side of the current trend the vast majority of the time. And for now at least, the trend is your friend.
Read more...Monday, March 12, 2012
Stocks are moving a bit lower this morning as traders appear to be fretting over the trade deficit numbers out of China (the trade deficit was the worst in 12 years and prompted concerns about growth). In addition, with the Fed on tap tomorrow, the dip buyers may decide to sit on their hands and take a day off today.
From a technical perspective, it is worth noting that there is resistance at current levels and that market momentum appears to be waning. However, given the type of run that the market has enjoyed lately, experience tells us to give the bulls the benefit of any doubt for a while.
Read more...Friday, March 9, 2012
Stocks are movin’ on up this morning as the “big bad events” (the Greek debt swap and Jobs report in the U.S.) appear to have come and gone without the sky actually falling. This week’s little decline apparently put some fear back in the market, which has allowed the dip-buyers to return with confidence. Thus, our guess is that the Dow 13,000 watch will return shortly.
As for our activity this week, our systems are designed to try and avoid as many whipsaws as possible. But after a nice long run to the upside, I will take the sell signal the system issued every single time. Remember, “being wrong” is part of this game. It’s not IF you will be wrong, but rather how often and how you handle it. Thus, I’m happy that we were able to quickly get back on the long side of the game.
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