Online Stock Trading | What started out as a boring day, ended as a nice big fat distribution day

What started out as a boring day, ended as a nice big fat distribution day


Filed Under Market Commentary |

The morning started off with some weak economic numbers but nothing that got traders excited. However, after lunch as traders began settling back down things did not look good. As 1:30 approached the Dow was still leading the way but as the afternoon moved on a wave of selling began. Small caps stock bore the brunt of the action followed by Mid Cap stocks. When the day ended we saw stocks lower on higher volume marking a distribution day.

This is precisely why I have been advising to keep new buys small and to a lessor extend your losses to be kept small. Take a look at EDU down 4.15 to 43.75 after its breakout. It is holding its 50dma but a major reversal. These things will happen but in this type of market we aren’t going to see a ton of HUGE gainers!

VIX exploded as stocks reversed closing the day at 14.22 up 1.77. Although a nice gain, this index must move into the 30 territory to see any type of huge gains. Not too mention a meltdown in the market to reset bases.

Other sentiment indicators: overall CBOE put/call reached 1.01 at one point ending the day at .94. Still showng that there are some bears left to short this market. It would be more incouraging to see the bears not show up at all. We did see about 5% of stocks move below their 50dma as stocks above their 50dma finished at 61% while stocks over their 200dma dropped from 73% to 71%.

The NASDAQ now sports 4 distribution days in the past 4 weeks. I am cautious here, there is still a bullish tint to the market and we could see further price gains. However, looking at the Chinese market (which caused the drop on 2/27) hit another all time high but on lighter trade…something to pay attention to down the road.

Caution as we head further into this week, if you have weak stocks I would definitely look to take some chips off the table.

Aloha and happy trading,
MS

marketspeculator@gmail.com

Last 5 posts in Market Commentary

Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Netvouz
  • DZone
  • ThisNext
  • MisterWong
  • Wists
  • Bumpzee
  • StumbleUpon

Comments

8 Responses to “What started out as a boring day, ended as a nice big fat distribution day”

  1. John on May 1st, 2007 8:46 am

    I am sorry I cannot continue reading your site due to your blatant bias to the negative side. Caution is always good, but your consistent negative attitude and analysis of the market is tiring. No mention of the benign inflation data that now sits at 2.1%, which is barely over the fed’s comfort zone. You have completely missed the rally since the follow through day in March. Additionally, you hope for distribution days and negative scenarios. I thought people that lived in Hawaii were more optimistic. Anyhow, I will be sticking with other sources for a more objective assessment of the market. I doubt I am the only reader of your site that feels this way.

  2. Market Speculator on May 1st, 2007 10:13 am

    John,

    I am sorry you feel that way…but having bias is an opinion on the market. I believe I have given you some stocks that I like…but they have not performed well.

    I write what I see…I write about facts and what they mean to this runup.

    One thing you do not understand is that having a 10% pull back for longer than 7 weeks will produce many new winners…if you have studied the market you would know this. Do you know what happens after a forest fire??? NEW GROWTH, faster GROWTH…this is what I want.

    I wish you the best in the future and hope you come back.

    MS

  3. Market Speculator on May 1st, 2007 10:14 am

    John,

    I appreciate the candid feedback.

    MS

  4. Market Speculator on May 1st, 2007 10:25 am

    Your CPI data is incorrect…

    CPI (YoY) is 2.8% not 2.1%
    CPI ex: F&E 2.5%

    New numbers will be released 5/15

  5. John on May 1st, 2007 2:38 pm

    My apologies, I was referring to core PCE price index, which dropped to a 2.1% yoy rise — just a tenth of a percent above sub-2% Fed ‘comfort zone’. Good luck to you!

  6. Market Speculator on May 1st, 2007 2:43 pm

    John,

    Why don’t you start up your own blog here at IP?

    Come join the chat room = http://www.investorsparadise.com/newchat.htm

    I invite everyone to do so!!!

    You have to recognize that we have not had a 10% correction in 4 years….NOT ONE!

    Enjoy and hope to see you in the chat room.

  7. Market Speculator on May 1st, 2007 2:47 pm

    If you are referring to the GDP Personal Consumption Price Index YoY … its at 2.7%

  8. Market Speculator on May 1st, 2007 2:51 pm

    I think you are looking at PCE CORE which is at 2.1%…

Leave a Reply