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Institutional Selling Accelerates in the Final Hour as Stocks Close Lower

|Includes: DIA, DRV, EFU, FAS, Direxion Daily Financial Bear 3x Shares ETF (FAZ), GLL, SOXS, SPY, SQQQ, ZSL

Hope of a European Bailout deal still fresh on Bulls’ mind gave a boost to stocks at the onset of trading. Early morning trading witnessed to stocks moving to the upside, but volume simply was not accompanying the move. At mid-day it appeared the market was going to be able to hold onto its gains, but institutions once again stepped up and sold stock. During the final hour volume exploded as sellers dumped stock on the market, not a sign of strength. We continue to believe this market is very sick and today’s move once again has confirmed our view of the market.

At the most previous low last Thursday a few traders have remarketed the internals did not confirm the move lower by the market. While this may be a fact the most important factors in the market is market leadership and the price/volume action of the market. You can create all the oscillators and signals you want from price and volume, but nothing is more important than those two elements. Keep it simple because the quality of decision making will only erode as complexity grows. Complexity will also bread doubt as multiple indicators flashing mixed signals can and will only confuse you. Keep it simple and stay with Big Wave Trading.

Tomorrow brings on economic data including jobless claims and GDP readings. Briefing forecast for the third estimate of GDP is 1.2%. A prior reading of 1.0% last month did not help stocks. ISM figures including the Manufacturing and Service sectors have been below forecasts. Slumping ISM readings does not inspire confidence we’ll see much of a jump above 1.2% for GDP. We’ll certainly see the market react to the figure released tomorrow. Given the current market environment it does not look promising for the bulls tomorrow.

There is only one side of the market and that is the RIGHT side. Bull or Bear we don’t care! Be on the right side. Win big on being right and lose small on being wrong.