It is clear as day the NASDAQ Composite index is the leading index of this market. Technology stocks have been big winners since the August decline. About mid-morning rumors were swirling the Austrian Government voted no on a bailout package for Greece. Sellers, or let’s blame the High Frequency Traders (HFT) took the market to its lows of the day. The Dow was down more than 100 points, but the rumors were false the Austrian Government simply delayed the vote. A big sigh of relief for the market as the NASDAQ snapped back and began to race higher. Later in the day Sarkozy and Merkel announced France and Germany were not about to let Greece leave the European Union. A late day sell-off dampened the mode as volume increased on the NASDAQ and slipped on the NYSE. Some positives in this market, but we are a ways from seeing a sustainable move to the upside.
The Investors Intelligence survey now shows more bears than bulls a big swing in the survey. Sentiment did take some time to get negative, but given the August decline it doesn’t surprise us traders are overly negative. Just look at our current problems around the world and it is no wonder everyone is bearish. Europe is basically insolvent as Greece mulls over a default. Greece hasn’t been able to hit one of its budget targets and confidence is growing thin a deal can be worked out. Here in the states we have our own debt issues and our government can’t work together to get anything done. Sentiment readings do not make us money, price and volume do.
Many stocks are still very wide and loose and need time to tighten up. There are a few names popping up on our radar screen showing accumulation. The downside to this is we don’t have that many leaders looking good and we are at resistance. Best case scenario we simple move sideways and build accumulation. The worst case scenario we have another leg to the downside taking out August lows. Whatever the market has in store for us we will be prepared.
Cash remains king and as always cut your losses! It is how to invest!