Sunday, December 16, 2012

Stock Market Outlook - Choppy, Frustrating Market Continues - 12/16/12

I talked last week that the market was basically in a holding pattern waiting for a move one way or the other from the range it had built for very late November and the first two weeks of December.  That range was easiest seen on the Russell 2000, but was noticeable on the Nasdaq and S&P as well.  I had hoped a move out of this range (either way) would get a tradeable move going into the end of the year.  That was too much to hope for I guess.

We did get a great move out of that range on the Russell early Tuesday morning via a big gap up, a move that was matched on the S&P and Nasdaq, although not quite as strongly.  That gap held for most of the day.  Volume confirmed the move as well.   Then a little weakness came in late Tuesday on both the Nasdaq and S&P and our break out of the range was history. 

Russell 2000 - Breakout, Then Fake Out

If you're frustrated right now, you're not alone.  This simply isn't a very easy market at this particular point.  I made a little bit last week because I caught a decent trade in CLSN but over the past two weeks, my account has gone pretty much nowhere. Perhaps we do get the typical Santa Claus rally into the end of the year but so far all December has brought us has been choppy, confusing, lifeless trade.  Normally the meaningful technical breakout that was seen on the Russell last week that was immediately reversed would be extremely bearish, but the bears don't even have enough strength to push this market down hard.  I can't honestly call any of the selling seen on Wednesday, Thursday, or Friday heavy because only the Nasdaq is below its twenty day moving average right now and that's only because AAPL tanked on Friday.  

There were a few charts that stood out as I did my scans this week (shown below), but I honestly don't even have a gut feeling for where this market goes over the next few weeks into 2013.  We are a bit oversold and sitting on some moving average support for most indices, so perhaps looking on the long side is better at this point, but my guess is we just chop around the way we have for the past two weeks.  I absolutely hate saying that, but I think it's true. 

ARNA
 DK
 ECYT
 EPAM
 MANT
 PEGA
 SMBL
Charts from TC2000, Courtesy of Worden Brothers, Inc.

The fiscal cliff is still there and still hasn't been dealt with by Congress, and because nothing typically gets done in Washington until the last minute (if ever), we may be looking at a situation where rumors continue to drive trading until that last minute (which could be after Christmas).  Perhaps just trading lightly or not at all is the best idea right now.   Scalping or daytrading has really been the only way of making some dough the past few weeks, so I will continue to keep any trades I make very short-term in nature.

To be honest, after what happened in Connecticut last Friday, I don't know how much my mind will be focused on trading anyway for the next few days or weeks.  Having worked in the education field as well as being a parent of two young boys (one in first grade), this hit very close to home and I still can't get my mind around what Adam Lanza did to those kids and that community and what those parents are going through right now.  In general, I am not one to be emotional but thinking about this tragedy continues to bring me close to tears.  Life is difficult and throws curve balls at everyone, but I cannot fathom anything worse to have happen to a parent than this.  My thoughts like all Americans are with that school, that community, and our country as a whole. The only positive that could possibly come out of this horrible event is that perhaps something will get done in Washington to deal with this issue, both on the mental health side and the assault weapons side.   It just sucks that something like this would have to happen in order for change to finally occur. 


Best of luck this week and if you have kids, give them an extra hug this week.  Take care.

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