Short scramble....
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FusionIQ for 4/9/10---Tape Resilient...
Stocks were resilient on Thursday as they shook off a minor uptick in the initial jobless claims to work higher. What was impressive about the reversal was the market’s ability to shake off these numbers even though going into the release there was a preexisting overbought condition. Like we said yesterday the market is seeing two key groups, the financials and transports catch a bid of late. Typically when these two groups are moving higher this bodes well for stocks.
From a market breadth standpoint new highs continue to trounce new lows on a fairly regular basis on the NYSE, NASDAQ and AMEX. Additionally their advance-decline lines continue to work higher.
When looking for a clue as to when things may reverse course on a more consistent basis we continue to watch sentiment and liquidity. At present liquidity is still ok, however it is not nearly as robust as it was say just 6 months ago. Sentiment while creeping up is not a problem either just yet. We continue to stay the course and believe as we approach 1,300 on the S&P 500 that investor should start to lighten up as this level likely will coincide with an excess of bullishness and taped out buying power.
Setting a trailing stop program on open long positions makes sense give the extension of the rally off the lows and the approaching 1,300 resistance level.
3/15/2010 ... Stocks tread water to start the week ...
It was sort of a ho hum day on Wall Street with not a lot of activity as stocks pretty much stayed in a fairly narrow range for most of the day. The muted action was mixed with techs showing a small decline while the industrials managed to eke out a small gain. Market internals reflected the apathetic trading activity with down volume slightly out pacing up volume on the NASDAQ by a 1.26 to 1 ratio. Additionally the NASDAQ spread between stocks declining and advancing was narrow at 1.32 to 1. The slight negative trade was also felt on the NYSE as 1.40 stocks declined for every one that advanced and down volume edged up volume by a 1.48 to 1 ratio. The S&P 500 which made a new high for the year on Friday couldn't deliver any follow through to start the week. However given it has advanced 10.19% from the recent lows we are not surprised by the pause trade here. Near term support for the S&P 500 below the market comes into play in the 1,140 to 1,135 region. We continue to expect stocks to back and fill a bit here then make another attempt at moving to new highs. The one thing to watch for here continues to be the ratio of up to down volume and decliners versus advancers. If we get a day where down volume out paces up volume by a wide margin (say 4 to 1) and during the same session decliners score a similar margin against advancers then and only then would we become more cautious.
MarketWrap 1/20/10---FusionIQ thoughts on "Is this the top?"
U.S. stocks ended off earlier lows but still lost more than 1 percent Wednesday as China, earnings and the dollar's gains clipped the market's momentum after Tuesday's rally. The Dow Jones Industrial Average shed 122.28, or 1.1 percent to close at 10,603.15, erasing all of the prior session's gains. It was the worst one-day percentage drop so far this year. The S&P 500 fell 1.1 percent and the Nasdaq dropped 1.3 percent. Most Dow components finished lower, with IBM, Kraft and Alcoa at the bottom of the pack. Bank of America, Merck and Disney were among the few gainers. Spooking investors was a report that the China Banking Regulatory Commission had asked several banks to stop issuing loans. While the CBRC's chairman denied that he had asked banks to stop lending, Bank of China, one of the country's big banks, said it was taking steps to rein in loans. The dollar hit a one-month high against the euro amid worries about Greece's financial situation, and rose against other currencies as the election of a Republican for a U.S. Senate seat in Massachusetts raised expectations for spending cuts in Washington.
As we commented earlier today to customers…..The legions of worry warts still abound as every minor sell down continues to be met with the response, "Is this the top ?" The answer is probably not, especially while pervasive concern continues to be the dominant investor theme. Now that said can we have a correction of five10 percent? Of course. However, we continue to find it hard to believe that top is in play when everyone continues to call for it! After all tops are formed when everyone becomes so comfortable with stocks they invest all their available liquidity without a hesitation or care in the world. And clearly that is not the current sentiment. Again, it is very likely we will have some semblance of a decent size pullback soon seeing the S&P 500 has run up 10% from just November 2009, 31 % since July 2009 and 64 % from the March 2009 lows. So do we think a major top is in? The answer again remains no. In regards to protecting capital from a drawdown or a correction or what is the risk to putting new money to work today and the answer changes. The answer in this scenario is the run up in equities puts investors at risk to a correction, not a top, but a correction. Our guess is that the correction would be similar in size and scope to the June/July 2009 correction that saw the S&P fall 9.00%. This correction would likely create more pessimism and fear and then create one last leg up that would create the overconfidence associated with a top or a very long and protracted trading range. At this point the best thing to do it to place trailing stops on current positions and or buy an inverse ETF to hedge out some temporary drawdown possibilities. From a trend perspective the trend remains up and must be respected. If the S&P 500 violates its up trend near 1050 we would suggest getting more active with a hedging strategy or tightening up stop loss levels. However, this remains a market fraught with caution not speculation thus we continue to believe corrections should be relatively shallow.
1/20/2009 ... Market correcting a bit ...
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1/11/2010 ... Tops take time to form ...
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MarketWrap for 1/4/10--Stocks start new decade on positive note...
Stocks and commodities rallied and the dollar slumped on the first trading day of 2010 amid signs that manufacturing is improving around the world. Oil climbed above $81 a barrel after freezing weather hit the U.S. The Dow Jones Industrial Average closed up 155.91 points, or 1.5%, to 10,583.96, posting its biggest gains in point and percentage terms since Nov. 9. The technology-heavy Nasdaq Composite gained 1.7%. The Standard & Poor's 500 index climbed 1.6%, with all its sectors posting gains. Its materials and energy categories led the gains, up 2.8% each as gold futures rose to a two-week high and crude-oil futures climbed above $81 a barrel while the dollar sank. Investors were encouraged after the Institute for Supply Management showed a bigger-than-expected uptick in manufacturing activity during December, helped by improving production and ordering activity. Factory employment also showed gradual improvement. Also comforting some were Federal Reserve officials' comments from the weekend that played down the idea of lifting its easy-money policy in early 2010. Nevertheless, Chairman Ben Bernanke said the Fed needs to "remain open" to raising rates to avert or pop future asset bubbles. Trading activity picked up from the anemic pace of the last few months of 2009, hitting a two-week high, though it remained below last year's daily average. Most traders and money managers believe it will take a few more days for Wall Street's trading desks to return to full strength and that the gradual return of participants will tend to boost the market in the near future.
FusionIQ's Barry Ritholtz is the Yahoo Tech Ticker Guest of the Year....
Tech Ticker's Best of 2009: Guest of the Year, Barry Ritholtz: by Aaron Task
On March 10, Barry Ritholtz, CEO of Fusion IQ, came on Tech Ticker and said the "mother of all bear market rallies" was upon us.
Given the appearance was within 24 hours of what proved to be a historical market bottom, that call alone would have put Ritholtz in the running as our top guest of 2009 and winner of the coveted (and fictitious) "Purple Microphone" award. Ritholtz's call was more notable because, until then, he'd been steadfastly bearish on the market, meaning he was one of the few pundits to successfully navigate the downturn of 2008 and play the upside of 2009.
But unlike many other bears who turned bullish last spring, Ritholtz didn't abandon bullishness as the rally continued through the rest of 2009:
In May he said: Don't Call It a Suckers Rally
In mid-September he said: The Rally May Only Be in 6th or 7th Inning
And as of last week, he was still saying you have to give the rally the benefit of the doubt, suggesting the S&P could hit 1300 before faltering.
While other Tech Ticker guests were bullish on stocks in 2009, many did so because they believed a V-shaped recovery was afoot and that the housing market had bottomed. Ritholtz was able to walk the intellectual tightrope between being bullish on stocks and being skeptical about a robust recovery, especially in housing. As 2009 comes to a close, both calls are looking prescient.
Still, nobody's perfect. In mid-June, Ritholtz dismissed the "second-half recovery" story and said stocks were more apt to retest the March lows in the fall vs. hit new high, although he subsequently reverted back to the bullish (and right) side.
Link to the video is here:
