The Follow-Through Day (NASDAQ:FTD) that was not to be. After the release of the Federal Open Market Committee (FOMC) meeting minutes stocks took a jump to the upside. Traders hung their hats on the revelation the committee openly discussed another round of bond buying (or what we call money printing or quantitative easing). However, despite the recent gains and negative sentiment from the Investors Inteligence survey the market was unable to hold onto its gains. The NYSE composite and Russell 2000 were the winners of the day, but it was hardly a FTD.
The NASDAQ nor the S&P 500 confirmed a new uptrend today. Normally, we’ll see both the S&P 500 and NASDAQ confirm a new uptrend. Interstingly enough 9 out of the 10 industries outperforming today were in the bottom of IBD’s industry ranking. Even better the top 9 out of 10 industries ranked by IBD were among the worse performers today. Hardly what you would call a FTD. The market environment is very shaky here at best. We could see the market push higher on the hope the Eurozone leaders can sure up their debt crisis. But, all signs point to lower equity prices in the weeks to months to come. Cash will remain king.
Bearish sentiment continues to run rampent in the Investors Intelligence survey. Normally, this situation would be seen as a bullish sign. Typically speaking, but this time around it appears EVERYONE has noticed how bearish the newsletter writers are. Did the contrarian indicator turn into Gemini? Dr Jekyl and Mr Hyde? The market will prove this to us, but the wedging as of late indicates this rally we have been experiencing will come to an end.
Cash is king and will remain so for quite some time. We are now looking to re-enter into some high profile shorts. The indications are the short side of the market will be the right side. Stay on your toes and always have a gameplan! Cut those losses short.