NOTE: I HAVE TO BE A TOUR GUIDE TO FRIENDS VISITING ON MAUI UNTIL ABOUT JULY 16. DUE TO THIS SOME POSTINGS WILL BE LATE. THIS WAS POSTED AFTER THURSDAY'S MARKET SESSION:
Traders showed their appetite for the stock sending stocks to their highs of the day at the open. A perceived better jobless claims number provided the boost traders needed, but that boost was short lived. After retail sales showed the consumer was only coming out for bargains the market began to act listlessly. Volume soared at the open, but quickly fell back to earth running slightly higher all day. By early afternoon the market hit new lows on the day but buyers continued to step up and support stocks. Heading into the final hour volume slipped up as prices began to rise. The late day rally pushed stocks back near the highs of the day, but volume dropped ending the day well below Wednesday’s pace.
The light volume push certainly has proven institutions aren’t backing this most recent uptrend at the moment. There are a few stocks breaking out or getting support, but there isn’t a plethora of stocks really showing mighty strength. This certainly doesn’t drive a stake through the heart of this uptrend just yet. It is quite possible in a week or two as the market consolidates the move off July first lows. If you do go long in this market it’ll be important to cut your losses short. Be very careful of high volume reversals here, much like in early June a high volume reversal here soon would be a death blow to the market. We aren’t out of the woods yet, so tread carefully.
What would get me excited would be another follow-through type day with volume surging throughout the day. It doesn’t necessarily have to be above average, but it would have to be near it. Secondarily, it would be a plus to see this second follow-through day either retake or get to the 50dma. Right now, we still are quite a ways below the both the 200dma and 50dma and a big push on big volume would go a long way in my book. At that point, even though we’ll be a ways off the lows you can jump on the leaders and make up for lost ground. Catch up is easy in a powerful uptrend and why I am not ready to jump in this market with both feet. Patience is a virtue and luckily time is on our side.
Once again call buyers were out once again with the equity put/call ended the day at .595 showing once again sellers were complacent showing many are expecting this rally to continue. Bears are out there, but they do not appear to be putting their money where their mouth is. Negative sentiment is certainly a key ingredient for a market bottom, but it isn’t an exact science and sentiment is a terrible “indicator.” Again, there are positive signs forming in this market. It just hasn’t been enough to give me the confidence to really plow back into the market.
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Enjoy the weekend.
Disclosure: No Positions