By Gareth Soloway on March 24th, 2010 7:52pm Eastern Time
The markets had a rare down day today. The most interesting part of the trading action, for the first time in almost two months, the markets could not start buy programs that held. Volume remained light but still, the market did not seem to show the same resiliency it has in the past two months. Even more interesting, many leading stocks that were weak yesterday, continued to be weak today. Stocks like Amazon.com, Inc. (NASDAQ:AMZN), Goldman Sachs Group, Inc. (NYSE:GS), Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) have seen two consecutive days of neutral to lower moves. However, Apple Inc. (NASDAQ:AAPL) and JPMorgan Chase & Co. (NYSE:JPM) continued to jump higher. These have truly been the leaders since the February 5th, 2010 low.
The most interesting thing I noticed as I traded intra day was the multiple attempts of the market to have their usual buy program. These attempts failed over and over again. This is a very rare occurrence in the last two months. It seems day after day the markets are propped up, light volume gives way to a small buy program. If the markets gapped lower, a buy program takes them positive. If the markets are flat into the last hour of trading, a buy program takes them to the highs of the day. While this is the norm, today it did not happen. While it did not happen, many times throughout the day it seemed like it started, then failed.
By no means should a trader of this market read into this too deeply. At this stage, we all must take this market with a grain of salt. We must wait for confirmation signals to show us the path. In all fairness, the markets took a lot of solid negative news in stride. The downgrade of the debt rating in Portugal spiked the dollar. New Home Sales were dismal. All in all, a rare down day did follow.
Tomorrow the markets will get Initial Claims and Continuing Claims reports. Initial Claims are expected to be around 450k. Most likely, this number will come in line with estimates, give or take 10k. I do not expect a major reaction off of the number. What I would watch for is more information and news out of Europe. It looks like things are beginning to unravel again and if the dollar rips higher, the markets may be under pressure. In addition to the economic news, watch earnings news from Best Buy Co., Inc. (NYSE:BBY) and Oracle Corporation (NASDAQ:ORCL). Best Buy reports tomorrow before the bell while Oracle Corp. reports after. These earnings reports could actually have more sway than the economic news.
In addition to Europe, more pressure building between the United States and China. Trade wars, currency manipulation are being thrown around too easily and one wrong step could cause a small market moving fiasco.
What worries me most? At current levels, stocks have great news factored in price. Should one blip hit the screen, we may seen a quick, big sell off on solid volume. Institutions continue to hold as volume has been light. Should they get spooked, dumping could occur.
I continue to watch the markets closely, looking for any signal that may point to a reversal in trend. For more info, up to date analysis, technical videos, alerts, market, stock, commodity and currency calls, join the Research Center at InTheMoneyStocks.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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