Just after noon, stocks took a dive, after rallying from the morning lows. The final hour of the trading session ushered in sellers pushing the major stock indexes to their final lows of the day. Only the last 5 minutes did we see buyers step up and save the market from broad distribution. Perhaps the robots are going crazy, but today's action does constitute as a stall day. This most recent uptrend does have two distribution days across the board and now one stall day. Yesterday's bullish intraday action was done so on light volume and therefore not as significant as today's action. While not an end all be all day it is important how the market reacts over the remainder of the week. Today's action is a red flag for the most recent rally and we'll need to be aware of the market movements for the rest of the week. Still, overall, we remain in a slight uptrend and will invest accordingly.
The VIX finally woke up on a day where intraday volatility was not relatively large. Fear has been absent since June when the market hit its most recent low. Perhaps the Federal Reserve put has driven away sellers, but today they did come back. Interestingly enough on March 16th the VIX hit a low of 13.66 and yesterday the index hit a low of 13.67. While it did not pin point an exact high the NASDAQ would hit its intraday high a little over a week later on the 27th of March. Perhaps this market can rally further and why it is important to see the action over the next couple of days. In order to continue to move higher we'll need to see bullish price action. Keep an eye on distribution and stalling the rest of this week as it will be a hint where this market is heading.
It took to the 3rd paragraph to talk about economic data! Retail sales jumped more than expected, but PPI came in hotter than expected. The market cheered the retail sales figures, but largely ignored the economic reports on the day. In the end, it really doesn't matter and all that matters is how we concluded the day. Leave the economic talk for the water cooler discussion and not your trading.
Tomorrow we'll have more fun with economic data in the morning with CPI figures. If the CPI comes in higher than expected, it will certainly be viewed as a negative. Ben Bernanke knows further easing will bring on higher commodity prices and with the drought in the mid-west it presents a very delicate situation for the Fed Chairman. It is all about executing your trading plan. Know your position sizing, entries, and exits.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.