Europeans got the market started with a jolt from their latest PMI report showing a better expected jump. The index showed a reading of 56 when the market expected 55 as the reading. It was all the market needed to push higher. US futures jumped and held through an unexpected rise in jobless claims as the market jumped at the open. Existing Homes sales were expected to drop over 9%, but were only down 5% month over month. This was all the fuel the market needed to push up and over the 50dma. Last Thursday’s high acted as a barrier for the market, but we did close in the upper end of the range with volume slightly lower on the NASDAQ and lower on the NYSE. Overall, a great day of price gains with little conviction behind the move.
Last night I talked about the needing to see POWER from this market. There were a few stocks breaking out today on big volume, but they weren’t a plentiful bunch. Volume was running higher than Wednesday for much of the day, but when 2 o’clock came around the volume compare was going to be a difficult challenge. A slight sell-off from the day’s high helped volume get back what is lost, but we were unable to sustain the levels seen earlier in the day. Often times these types of big gains are often shorts who are covering and panic out of their positions. Any number of reasons could be given for example many were anticipating the ECB releasing the stress tests and expect good results. Whatever the reason, volume wasn’t able to climb above the Bernanke crash created on Wednesday. This could end up meaning absolutely nothing and we continue higher, but it is something to pay attention to.
In after-hours trading Amazon, Sandisk, Microsoft, and Bucyrus all traded lower after the bell. Most notably, Amazon finished lower by 10.8% after missing their earnings and revenue. Retail continues to be a weak spot in this economy and we do not have to look further than the weak job environment. Consumers will only flock to the best and the very best and why Apple Computer continues to shine with revenue growth. Bucyrus even climbed above its 200 day moving average today, but will find it difficult to stay above it tomorrow. Tomorrow will be an interesting day for these stocks and will move the markets.
Chipotle Mexican Grill posted stellar earnings and saw its stock trade higher in after-hours trading. Sadly, the stock dove through its 50dma and is indicated to open below the key moving average. However, perhaps it can retake the 50dma with big volume and possibly set up in the future. For now, this former leader is still suspect.
Since last Thursday we have had two big distribution days and one day of accumulation and we are right back where we started. We’ll need to see accumulation from the indexes quite soon even though the big indexes: NASDAQ and S&P 500 are above their 50dma. The market always aims to fool, so be ready. Cash is still king until we get a better picture of institutions getting back into this market.
Disclosure: Short ISRG