Thursday, January 30, 2014

Indexes Scream Higher Day After FED But Volume Lags

While the indexes had big moves, volume lagged. Making an impressive market day look suspicious. This is the market's second attempt to rally this week on lower volume. The first attempt was followed by a high volume distribution day back to new correction lows.

Leading growth stocks (click for list) acted strongly. Several broke out of bases and bounced off their moving averages on strong, above average volume. Facebook (FB) gapped out of a flat base on a strong earning's report, QIHU broke out of a cup and handle base, Twitter (TWTR) and Pandora (P) gapped up off their fifty and twenty day moving averages respectively. In each case, the relative strength line either led or followed the stock into new high ground.

Amazon (AMZN) bounced off the fifty day moving average and got within one percent of a new breakout from a flat base ahead of its earnings report this afternoon, but was down around ten percent in after hours. Showing the danger of holding stocks into earnings during a correction.

Questcor Pharmaceuticals (QCOR), Netflix (NFLX), GasLog (GLOG), Tesla Motors (TSLA), and Jazz Pharmaceuticals (JAZZ) continued to follow through on their recent relative strength.

Well Care Health Plans (WCG) is working on a double bottom base which is now the tightest structure in the almost two year consolidation. The company is set to report earnings on February 12th before market opens.

A day after the FED, interest rates finally realized the FED had tapered an additional ten billion dollars down to sixty five billion a month, and rose, while Silver (SLV) resumed its bear market downtrend off the fifty day moving average.

Natural Gas which broke out of a cup and handle on enormous volume last week, stalled on the heaviest volume in years.

Home builders, Toll Brothers (TOL), Standard Pacific (SPF), and Hovnanian (HOV) had a rough day but continue to hold their consolidations near fifty two week highs.

On the short side (click for list), retailer's JC Penney (JCP) continued its melt down to all time lows and Sears Holdings (SHLD) was rolling over the ten day moving average.

Rackspace Hosting (RAX), Newfield Exploration (NFX), and Community Health Systems (CYH) continue weak trading around their fifty day moving averages.

The market continues to behave wildly from day to day. Indicating that more downside is left. It is very difficult to initiate and hold longer term positions during these volatile times. The short side (click for list) has shown some good follow through with more setups developing. Trade the market for now, there is still plenty of time for longer term setups to develop.
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