Stocks enjoyed large gains on Monday but volume, a critical component of institutional sponsorship, was lower than Friday’s level which means a FTD did not occur. However, the window remains open for a new FTD to emerge which will confirm the current rally attempt. Technically, as long as last Tuesday’s lows hold- there is a strong chance that the markets may be forming a short-term low. However, there is no rush to buy ahead of a FTD because doing so increases the odds of failure. To be clear, the bears remain in control of this market until the major averages close above their longer term 200 DMA lines or a new FTD emerges. A new follow-through day will emerge when at least one of the major averages rallies at least +1.8% on higher volume than the prior session. Until that happens, this is just a normal “oversold” bounce.
M&A News & EU Debt Woes Ease:
Before Monday’s open, some $19 billion of new M&A news was announced. One of the most popular was Google’s (GOOG) announcement that they planned to acquire Motorola Mobility Holdings (MMI) for $12.5 billion. The move helps Google compete with Apple and expand their popular Android platform. Over the past three days, the benchmark S&P 500 vaulted +6.5% which is its best 3-day gain since 2009. As previously mentioned, some of the largest moves (both “up” and “down”) occur during bears/weak markets.
Market Outlook- Market In A Correction
The latest action in the major averages suggests the market is back in a correction as all the major averages remain below key technical levels. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests caution is paramount at this stage until all the major averages rally back towards their respective 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.
Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
Volume Lighter Than Friday; No FTD!
Monday, August 15, 2011
Stock Market Commentary:
Stocks enjoyed large gains on Monday but volume, a critical component of institutional sponsorship, was lower than Friday’s level which means a FTD did not occur. However, the window remains open for a new FTD to emerge which will confirm the current rally attempt. Technically, as long as last Tuesday’s lows hold- there is a strong chance that the markets may be forming a short-term low. However, there is no rush to buy ahead of a FTD because doing so increases the odds of failure. To be clear, the bears remain in control of this market until the major averages close above their longer term 200 DMA lines or a new FTD emerges. A new follow-through day will emerge when at least one of the major averages rallies at least +1.8% on higher volume than the prior session. Until that happens, this is just a normal “oversold” bounce.
M&A News & EU Debt Woes Ease:
Before Monday’s open, some $19 billion of new M&A news was announced. One of the most popular was Google’s (GOOG) announcement that they planned to acquire Motorola Mobility Holdings (MMI) for $12.5 billion. The move helps Google compete with Apple and expand their popular Android platform. Over the past three days, the benchmark S&P 500 vaulted +6.5% which is its best 3-day gain since 2009. As previously mentioned, some of the largest moves (both “up” and “down”) occur during bears/weak markets.
Market Outlook- Market In A Correction
The latest action in the major averages suggests the market is back in a correction as all the major averages remain below key technical levels. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests caution is paramount at this stage until all the major averages rally back towards their respective 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
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