Tuesday, February 8, 2011

State of the Stock Market - 2/8/10 - "Lack of Sellers - Not a Glut of Buyers"

We saw another positive session today on Wall Street - stocks started flat but went pretty much straight up from there to finish near their highs for the session.  The gains were similar to yesterday - not that large and came on unimpressive volume once again.   I continue to sense a lack of strong momentum right now - it's like we're moving higher because there is simply a lack of sellers, not a glut of buyers if that makes sense.   Today's gains mean the Nasdaq and S&P have now been up 6 of the last 7 sessions (with the one down session being an extremely small loss).  

My signals are on "buy", but it is what I would call a "weak buy" as the secondary indicators haven't confirmed the primary indicator.  With the lack of volume on this move along with the somewhat extended short-term position of the indices, a pullback is likely here soon.  It doesn't have to happen, but it is not something that should be a surprise to anyone.   I would tighten stops on long positions if you have gains in general and keep your time frames shorter than normal. 

I posted some stocks last night on Twitter and of those shown, both AVL and MCP had nice sessions today, up 13% and 8% respectively.  Maybe someone out there was able to get into one of those.  Really, however, that was it.   Some stocks are still potentially ones to watch like BRNC, FMCN, and QLIK, but you have to weigh the risks of entering a position with the market extended versus the potential rewards right now.

I remain in mostly cash with only two long positions from yesterday, both of which were basically flat today.  I continue to see some stocks working and some aren't working.   There however doesn't seem to be a whole lot of rhyme or reason as to why right now.   Overall, I do believe it remains a market where gains can be made, but they certainly aren't easy to make, and those are the type of markets you have to be careful with.   Staying with smaller positions and shorter time frames is probably a good idea until we either get a decent pullback where some charts can reset themselves a bit or individual stocks simply start acting better overall.   Good luck Wednesday. 


Elizabeth said...

As always, you remain one of the most practical voices in the blogosphere. Thanks for helping to keep us sane and/or safe.

shalah said...

Found your blog more than 6 months ago. 2 warnings you gave, I did not listen. loss a lot of money. Last time you gave warning, I listened, did the stop loss you showed, and I protected my gain. Thank you very much.

Mac said...

Thanks for the kind words - glad to hear someone is benefiting.