Market Outlook
A dog day of summer...
From yesterday's market outlook:
“We do have that 11,700 ceiling just above on the dow, and volume is still fairly small, so tomorrow could see a morning pop followed by an afternoon selloff.”
Wednesday was pretty much what we were expecting – a low volume drift upwards with very little momentum or conviction in either direction. Actually a pretty characteristic mid-summer day for a change.
In terms of the market averages all had positive days, but all have the look of a ball that’s thrown in the air that is starting to run out of momentum and start it’s descent back to earth. The Dow came to within 2.5 points (On 11,700) of our upside target, before turning tail and heading back down. The Russell and Nasdaq composite averages also came to within less than a percent of major moving average resistance before turning back down.
The VIX continued to drop, bouncing off support right before our downside target mentioned in yesterdays outlook and video. It has found support at this level about 6 times in the past two months, and each time has gone up for the next few days following the retest, so that would certainly be a logical scenario.
Financials are looking toppy once again, although there were still a number of very strong smaller regional financial banks. This may be just short covering, but the charts rarely lie and they do look strong on a few.
It was a very nice day for the majority of our portfolio stocks. The only dull spot was a loss on our BIG short trade, but our gain on SIL, which was stopped out with our raised stop in the last few minutes of trading, more than made up for it. A few of the newly triggered stocks look very good here, we are playing it safe and raising stops wherever applicable, as this is just not the market to be taking big chances in. WE are going to add one new short to the mix tonight, and will see how the market acts tomorrow.
Thursday should be telling – and could go a number of different ways. It is completely feasible to see another low volume, low conviction day where nothing moves much. As we have seen recently a major selloff is can occur at just about any time, and there are certainly no shortage of reasons for it. Now we are in overbought territory, and in a bear market that’s about all you need. That said if we can break out above the 2008 January lows on the Dow, we could see a big rally.
Whatever the case there are a number of very pretty charts out there both to the long and short side, although more so on the long side. This is still very much a stock pickers market, and we have been picking very well lately. Last nights watchlists contained 6 stocks that gained 5% or better in the long watchlist (2 of them over 12%), and 4 that lost over 5% on the short watchlist. There are again a number of nice setups that could produce some big winners tomorrow, and we will be in the chatroom for the play by play, which should be interesting.
Have a great evening.
Quote of the Day
"The foolish man seeks happiness in the distance, the wise grows it under his feet."
James Oppenheim
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