Wednesday, March 3, 2010

State of the Market - 3/3/10

We saw a day today very similar to yesterday on Wall Street, as stocks started the day strong but finished well off of their intraday highs. The first two hours of trading was very nice, with stocks opening higher, consolidating, and then moving higher from there. That was it, however, as they fell, then moved sideways around 1:00 before falling further around 2:20. A bounce in the last hour prevented major losses and stocks finished basically flat, but overall it wasn't a very impressive day for the bulls. Volume looks to be quite weak.

Technically, I think we are either consolidating here or churning here, but I don't know for sure which one it is. I tend to lean toward churning as stocks have been higher early on in each of the past two sessions only to give up those gains. I've also been mentioning the fact that the S&P continues to lag the Nasdaq, and that's its weak volume is a sign for concern. I don't think the bulls are necessarily done yet, but I continue to look for a pullback very soon. Hopefully it won't be one that does a lot of damage and is more one that can just work off this overbought condition we now again face.

Sector-wise, not much is going on - the dollar had a breakdown today which pushed commodities up a bit. They are, however, also somewhat overbought so be careful. Most sectors look very similar to the indices - it is possible they are resting here but it is also very possible they are losing steam.

I made one purchase today - went into AMFC around $7.25. This was a low-float Chinese stock that popped on earnings and I felt it had the potential to move. It did early on, all the way up to $7.80, but faded mightily from there so I don't expect to hold it much longer. I also exited JADE at $2.84 with a small loss - just no follow-through there at all. I still hold NFP but even that looked a little tired today with volume coming in weaker. I don't think I will be adding to or starting any new positions tomorrow given where the market is at. I need to see some success from the longs I have and right now they are just mixed.

Good luck tomorrow - I don't have much more to say. I don't plan on doing much but managing positions as I think a pullback is likely soon. This week hasn't seemed to have much "steam" behind it - maybe I am just missing something. We'll see I guess. Take care.

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