Wednesday, April 21, 2010

State of the Market - 4/21/10

Stellar earnings from Apple couldn't get much going on Wall Street today, as stocks started the day positive but stairstepped their way lower throughout the rest of the session and closed mixed.   It was a day in contrast to recent trading where most of the selling occured near the open and then buyers came in to push stocks higher.    All in all, however, there wasn't a whole lot that happened - even AAPL moved strictly sideways after the open - kind of weird given its earnings from the previous day.   Volume appears lighter on the S&P and heavier on the Nasdaq due to AAPL. 

Technically, it remains tough to get a grasp on where we head next.   From what I read, earnings as a whole have been better than expected but so far the market hasn't really responded with exuberance.   Perhaps that's just because we rose so far so fast going into earnings season, but it does bear watching.   It remains very much a news-driven market and those are always tough.

As I look through stocks, I do see several warning signs that perhaps we are getting ready for further selling soon.   Financials are a mess - XLF is all over the place, but individual stocks like GS and BAC seem to be forming bear flags on their charts.   GOOG is a mess with a bear flag forming.  GMCR broke down the past three days and looks quite bearish (a strong IBD-type stocks there).   CREE had a very poor reaction to its earnings today.   I am watching AAPL and AMZN carefully here as they are hanging on just fine.  Weakness in those names would certainly give me more pause on the long side.

I went into a short position today via QID at $15.51 near the open today - basically just a gut feel.   I have my stop in place.   I still have some longs I am watching, but not taking any yet as none really excite me that much.   I am not dismissing the chance of a further rally here, but overall I am starting to lean more bearish right now.   If the next week or so is anything like the past few times things have gotten a little dicey, I will be proven wrong soon.   We'll see I guess.   Good luck Thursday.  

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