Thursday, November 10, 2011


After the pounding on Wednesday, the bulls managed a decent bounce today. There was some nervousness after the big loss so market players took the opportunity to do some selling into the gap-up open, but we managed to hold and drifted higher in the afternoon. Volume was lighter and there wasn't much energy to the trading, but the signs of panic that existed Wednesday dried up.

The biggest negative today was the poor action in AAPL, as there apparently are concerns that iPad sales are slowing, and even though it is probably still the most loved stock in the market, there was little interest in buying the dip. Technically the stock looks poor as it takes out recent lows and its 50-day simple moving average.

Unfortunately, AAPL isn't the only big-cap momentum name languishing lately. There just isn't any clear leadership in this market. ISRG and PCLN are probably the best of the big-cap momentum names right now, but they aren't that lively. Oil stocks have some momentum as crude heads for $100 a barrel again, but if you have been trying to play sectors or themes, there have been very few of interest.

The reason for this lack of leadership is that it is still a market that is mostly reacting to news headlines out of Europe. Everything goes up or down in tandem, and market players seem to be using mostly exchange-traded funds to trade the news rather than picking individual stocks.

I'm afraid that the focus on Europe is unlikely to change soon. There is talk that there will be some sort of deal in Italy over the weekend, and the market will be anticipating that tomorrow. Given how often we have spiked on some meaningless deal, the bears have to be a little nervous about being too aggressive in front of the weekend.

Hope that we will see Europe saved yet again is likely to keep a bid under this market into the weekend, but the possibility of a negative surprise can't be discounted.