Buyers stepped up mid-day to save the day as early morning selling sent the NASDAQ below Tuesday’s low. Volume surged on the selling, partialy helped out by stocks reacting to earnings news. However, the heavy volume selling during the early morning session was signaling trouble ahead. This was before buyers stepped up and sent stocks back to the highs of the session. By the close, the NASDAQ notched another (tecnically speaking) day of distribution bringing the total to two since Tuesday’s follow-through day (three since IBD’s confirmation). It does appear this market is getting support and buyers are finding themselves stepping up, a positive sign.
We are beginning to see some bases form in recent IPOs. Whether or not they pan out remains to be seen, but it is a positive signal. Unfortunately, stocks like WYNN and BIDU former leaders are getting hit hard. Other leaders like OPEN, LULU, NFLX, and others have broken down leading us to believe we still remain in neutral mode. We’ll get a signal to go either way here.
The market did get some positive news out of the Philadelphia Fed survey showing a surge in manufacturing activity. While this is certainly a positive we’ll need to see economic news pick up across the board before we declare this economy is rebounding. No one knows the future, making predictions is simply gambling. The yield curve is predicting a 60% chance of recession. Other indicators are pointing to recession, but this is useless for our trading. We rely on the price and volume action of leading stocks and the market. Ignore the noise, no matter how “good” it may appear.
This weekend will certainly be one for the ages with the European debt crisis looming. How much will the EFSF be funded? Will it be enough to satisfy the market? We’ll go with the flow and strike when the market gives us the right opportunity!