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Stocks Find Footing, but Rally Stalls as Traders Look to Friday’s Job Report

|Includes:Apple Inc. (AAPL), AVGO, BIDU, BP, C, CMG, CRM, CRYFQ, CSCO, CTRP, DDC, DELL, DGP, DIA, EBAY, EGO, EWY, GLD, GMCR, GOOG, GS, IAG, IBM, INTC, ISRG, MMM, MSFT, NEM, OVTI, PCLN, PCP, PG, POT, QQQ, SBUX, SHLD, SPY, TBT, UGL, VXX, YHOO

A weak jobless claims number as well as a weak ISM manufacturing number helped guide stocks to their lows of the session as volume raced higher.  Negativity rose, but not to extreme levels as traders dumped stocks in the first few hours of trading.  As stocks reached their lows gold began to sell off and sell off it did.  As gold sold off the Euro rallied against the US Dollar sending the US Dollar below its 50 day moving average.  While gold and currencies were having their fun stocks were able to find their footing.  However, the market failed to capture the proper bids to support the market getting back to their highs of the session.  All in all, stocks were oversold and were poised to bounce as we continue to move through this correction.

 

On February 5th of this year we saw stocks get pushed down to new lows only to see a massive reversal.  Today we saw something similar, but there was a component missing.  Volume was missing from the rally, especially at the end of the session.  Back in February we saw massive volume surge into the market at the end of the day as stocks closed higher.  Unfortunately, today, with the jobs report looming traders weren’t willing to step in front and get long stock.  For whatever the reason, there was hesitation amongst the bulls to get any conviction to the upside.  I know volume was higher, it just died at the end of the day leaving a bit of a sour taste in my mouth.

The number of AAII members who are bullish of the next 6 months hit a low of 24% while bears ended at 44%.  The number of bulls is a bit of an extreme but not the bears.  Interestingly enough the Investors Intelligence survey saw bulls stay even at 41%.  So respondents are saying we aren’t going higher over the next 6 months, but when we look at options the equity put/call only got to .83.  It wasn’t put buyers were out in droves panicking about the market.  Is there fear, yes, but it isn’t like we are seeing a ton of yet just yet.

Friday’s job report will be heavily watched with all the right reasons.  Today the market certainly painted a cautious outlook by simply not being able to retake the highs of the day and falling volume.  It is more of a sign of whether or not our economy is improving.  Its the economy stupid and without jobs this economy will continue to struggle.  Naturally, traders will be looking towards whether or not we are heading into a double dip recession.  Let’s see how the market reacts and take it from there.

Cash still remains king!  Enjoy the long weekend!

Stay tuned for our Christmas in July special coming soon!




Disclosure: No Positions