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Hope Fades on Debt Deal Stocks Finish Lower

|Includes: AAPL, BIDU, NFLX, PowerShares QQQ Trust ETF (QQQ), SPY

With little economic news to digest the market turned its sight on the Debt Ceiling debate in Washington, DC. Volume began the day lower on the NASDAQ and flirted with positive territory on the NYSE. By the end of the day however, the NYSE posted higher volume than Friday giving the S&P 500 and the NYSE composite a day of distribution. With six days of distribution the S&P 500 is indicating the market is very top heavy. While the end of the day was not so hot, mid day it appeared stocks were going to roar higher and forget about the debt ceiling worry. Sellers had a different idea as instiutions showed their true colors by selling NYSE stocks. The picture looks bleak for the market at this juncture and it will take a major turnaround to regain some luster.

NFLX stock reported earnings after the bell (time of writing) and the stock is taking a hit. Traders are taking the stock down in reaction to its earnings report. At this time the stock is trading below its important 50 day moving average suggesting a run here is all but over. The company guieded forecasts lower despite the change in its pricing model. Subscriber growth was less than stellar, but more importantly it will be how the stock reacts to the news in the days to come. Can it rebound? Or will heavy selling finally take this bull market winner down? It has had quite a run, but let the price and volume action dictate how you push forward.

It was quite funny listening to Chuck Schumer and Harry Reid talk about the debt ceiling debate live on CNBC. While I don’t normally have the volume up during the day, I wanted to hear the rhetoric from their side of the table. As the two spewed their rhetoric I couldn’t help think to myself that our system is broken yet they are doing nothing to fix it. The issues are quite simple…we spend too much from entitlements to war and our tax system is far too complicated and allows for loopholes. We can argue about what “right” regulations we need, but the spending and tax issue is quite simple to me. Time for a change from the normal DC theatrics, but will it come soon enough.

Stick to being a prudent trader! Cut your losses and move on.