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Joshua Hayes
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Joshua "MauiTrader" Hayes is CEO, President and founder of Big Wave Trading Inc., a Maui, Hawaii-based stock market advisory service. Hayes is a well-respected stock trader who combines fundamentals, technicals, psychology and money management to trade professionally for his personal,... More
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  • Something Doesn’t Feel Right but Stocks Close Higher on Increased Trade 0 comments
    Jul 21, 2011 10:17 PM | about stocks: ARUN, APKT, FFIV, CRM, VMW, PLCM, CMG, PCLN, NFLX, BIDU, ACOM, UA, ZAGG, EBAY, QQQ, SPY, DIA

    Financial stocks lead the market higher despite the pitiful performance from many leading stocks. Jobless claims jumped week over week, but it was better than expected readings from Leading Indicators and the Philly Fed helping out the market during the early going. Leading stocks bolted out of the gate in the morning trading hours only to see their gains evaporate and notch losses. Volume was much higher than Wednesday’s level giving the S&P 500 a big accumulation day. Not so much for the NASDAQ finishing off its highs was more of a blemish than a feather in its cap. Despite the gains, underneath the market continues to look weak with many market leaders coming under distribution.

    Stock market trading is not an easy game. It requires you to be disciplined and keep proper risk controls in place. We like to employ a cut loss strategy to keep our risk profile low. Pushing small losses into bigger ones is not the game we like to play. Stick to a disciplined approach, cut your losses!

    Back to the market, we are beginning to see many leaders stall out and come under distribution. Today’s gains on the surface look great, especially with financial stocks leading, but it is coming at a price. Many financial stocks are rebounding from lows and more than likely experiencing short covering rallies. However, taking a closer look at today’s rally and what didn’t rally it gives us pause as to what this market really is. Here is a list of stocks that either were lower on the day or reversed gains: ARUN, APKT, FFIV, CRM, VMW, PLCM, CMG, PCLN, NFLX, BIDU, ACOM, UA, ZAGG, EBAY even FFIV. These stocks have been perennial leaders in this market yet they were lower on a big up day. This situation is certainly something to keep a careful with over.

    While it may appear a good thing the S&P 500 is leading, but when the NASDAQ can only muster half the return the S&P can manage in a day there is certainly something wrong. Even small cap stocks lagged behind both the Dow and S&P 500. There are plenty of clues out there indicating the big boy institutions are dumping market leaders and we best take notice.

    While I’d love to believe this market is going to take off and enter new multi-year high ground the underpinnings of this market is not giving me the necessary conviction I normally would have. Something doesn’t feel right here and the best course of action is for you to continue to be prudent, disciplined and very heavy cash.

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