Tuesday, April 19, 2011

State of the Stock Market - 4/19/11 - "Still Tough"

We remain in an iffy market right now based on the action today on Wall Street.   Stocks started slightly higher, gave those early gains back, but then did rally through the afternoon and into the close.   This will make the fifth straight session where the Nasdaq closed well off of its lows which normally would be considered bullish.   Today, however, volume was light and no true price progress was made.   A move above the 50 day moving average around 2755 on heavier volume would give me much more confidence in the bulls over the next week or so.

Sector-wise, most ETFs remain under their 50 day moving averages like the major averages with the exception of the transports, retail, and of course commodities.   Gold and silver continue to chug along and silver in particular looks very extended.   With weakness in silver shares over the past week, I continue to wonder if a big pullback is on the horizon for the shiny metals.   We'll see.

I was stopped out of one long today but remain holding two longs and no shorts at this point.  There are a few stocks that are working each day (today REDF and DANG were the big winners) but not all are cooperating - SOHU is a good example from today.   Overall, I think it pays to be cautious here as though I think there is a better chance of us moving higher at least in the short-term from here, it's is not exactly easy pickings from the long side in terms of individual stocks.   Earnings will continue to affect a lot of things and that's where you have to just be patient.   Good luck Wednesday.


Chart Analysis said...

Those bulls sure aren't quitting, but like you said most of the key indices are still below their 50 MAs. I'll wait on getting my hopes up until they can close back above that MA. Right now all this strength the bulls are exhibiting is just getting the price smashed up against this key resistance, so a failure to break through here would get the bears some momentum.

Anonymous said...

DOW looks like it is forming a reverse head and shoulder??? WHat do you think?

Mac said...

DOW is forming more of a flat base. An inverse head and shoulder pattern comes off of a bottom, not off of a stock that has moved as much as DOW has.