The market remains in an uptrend despite late day selling
Better than expected retail sales figures failed to spark a morning rally, but it wouldn’t be long until buyers would step up to the plate and support stocks. The NASDAQ briefly took out its 200 day moving average, but volume was light. Volume ran light across the board, but it wasn’t until CSCO announced a dividend did buyers step up and volume jump higher. By 3:30 pm EST the market appeared to be on its way to closing near the highs of the session with volume running higher. Sellers had different ideas knocking stocks off their highs closing above the mid-point of the day. The last 15 minutes of selling did dampen the mood of the day, but we remain in an uptrend.
The market was on its way to pulling back on light volume and consolidating gains from Monday’s big accumulation. CSCO’s announcement came as a surprise as it said it would return some of its $40billion in cash to its shareholders in the form of a dividend. Investors rushed into the stock, but pulled out at the end of the day. We aren’t big fans of the stock as it is a laggard, but it does make up a good portion of the NASDAQ. While not on the scale of AAPL and MSFT (the two biggest components of the NASDAQ) CSCO does influence the NASDAQ.
More than 82% of stocks remain above their 20dma a lofty percentage in terms of a short-term view. On the other side of the coin 64% of stocks are above their 200dma. April’s top saw the number of stocks above their 200dma well above 90%. We aren’t quite there yet, but in the near term a pause in the market would go a long way to consolidate the recent gains we have seen in the market.
While we would like the market to pullback to consolidate gains it is about your stocks you hold. While our opinion is to have the market pause here to consolidate gains your individual stocks may have other ideas. One big example is RDWR jumping more than 37.8% today on a buyout rumor. Will this happen to every stock, certainly not. However, it does highlight in a solid uptrend it is best not to sell out simply because we appear to be overbought. If March and April didn’t teach traders overbought conditions can continue for much longer than expected.
We have yet to see any signs of major distribution in this market. It is bound to happen at some point, but until we see these days pile up and leaders fall we can’t assume we’ve reached a top in the market.
Opinions mean very little in the market and only price and volume action matter.
Top Current Holdings Up Today With Their Total Returns Since Purchase: LCUT 139%, JKS 110%, RDWR 68%, RDCM 43%, LGL 37%, MIPS 24%, ISLN 15%, GDOT 12%
Disclosure: Long: LCUT JKS RDWR RDCM LGL MIPS ISLN GDOT