Wednesday, March 17, 2010

State of the Market - 3/17/10

Another day, another gain for Wall Street today, as stocks started the day positive and the trend continued from there. Stocks rose slowly and steadily until around 2:00, when they pulled back rather quickly until the final hour when they bounced a bit into the close. They did finish with gains but closed towards the bottom of their intraday range. Volume looks like it quite low today which is not very bullish.

Technically, the story remains the same - we aren't resting at all and continue upward. The bulls remain in control even though the negative divergences in terms of volume and the Moneystream remain fully in play. There really isn't much else to say - a pullback would be very healthy here but it just doesn't come. The longer we go without one the worse I think it will be in the intermediate to long-term, but for now, it's onward and upward I guess. A small part of me would like to get short some of the indexes up here but there is really no reason to do so, other than the fact that we've gone a long way. That's not a good reason to short at all.

I made two trades today - neither were very successful. I entered SEED at $11.36 this morning after I thought about buying it yesterday at the close. It had pulled back and bounced off support yesterday and I thought it would continue upward. It didn't, however, and I was stopped out at $10.96 for a 3.8% loss. I also entered NEP at $9.28 as it showed good early volume and after pulling back for a while now, I thought it could also run. It also faded, however, and volume really wasn't impressive after the first fifteen minutes or so. I may be out of that one tomorrow.

There were a few movers today - from this weekend's video, JAZZ staged a nice breakout and was up 11%, along with NLST (up 7%) and MIDD (3%). Overall, however, that was really about it, as I continue to see very little follow-through and strong price action in the stocks I follow and like to trade. I saw some attempted breakouts today (XTEX, PCX, TSRA for example) that started very strong but closed quite weak. So I still sense there is a lack of momentum out there even though the overall market keeps going up and up. Weird is I guess the best way to describe it.

I am still slightly confused by our current market because the action in the stocks I follow continues to lag the action in the overall market. This doesn't feel like a typical "bull market" at this particular moment to me because typical bull market stocks aren't the ones making the moves. Perhaps there is a rotation going on somewhere from growth to value - I've read several articles to that effect this week. We'll see I guess - whatever it is, it is not making things that easy for my style of trading. The stocks that can pop 10-20% in a few days just aren't there right now. Luckily I've been mostly in cash for the past week or two, but it is frustrating to see the market move higher but not much happen with individual stocks. Hopefully we'll get out of this funk soon. Good luck Thursday.

1 comment:

positiontrader said...

I agree Mac. I see the same thing. That is why I went short today. The short positions might be too early but we shall see. The dollar also bounced from its 50MA today, so that also might not be too good for the markets in the short term.