Alert: Gap Lower, Turn High. Rinse, Repeat
The markets once again opened lower today, only to have the standard buy the dip kick in. Almost every trading day the markets open lower, then rally slowly up throughout the day, closing neutral to higher. The SPDR S&P 500 ETF (NYSE:SPY) opened at $133.46. This was a drop of 0.39 from the close yesterday. The SPY is now trading at $134.05, the highs of the day.
The reasons for the float are multiple. First, volume drops to a snails pace which enables the markets to grind higher. Light volume always favors the upside when the markets are in an upswing. Positive sentiment makes this so and retail money inches in, believing in the rally. Secondly, the Federal Reserve continues to buy treasuries from the banks, infusing the banks with massive amounts of capital each day. This is part of the QE-2 program. The banks take this money and use some of it to buy the markets. Add this with light volume and the markets are always going to grind higher. Last but not least is the U.S. Dollar. Most days, the Dollar opens neutral to higher and then starts dropping throughout the day. A move lower on the Dollar during market hours has a continued effect on the markets to the upside. A weaker Dollar is still good for U.S. stocks. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.40, -0.07 (-0.31%).
All these factors together make for a market that is unlikely to sell off sharply unless a global event occurs that increases volume and sends panic in the air. Egypt caused a one day sell off two weeks ago. That gives an example of what must occur. Note how that was a one day sell off. To see a bigger sell off in the markets, a multi day sell off, there must be something even more drastic than Egypt.
Apple Inc. (NASDAQ:AAPL) is on the move today, dropping to $358.10, -5.03 (-1.39%). This is rare with the markets higher but rumors and fears of Steve Jobs' health continue to persist.
Gareth Soloway
InTheMoneyStocks.com
Questions and Answers
Therefore here is an important piece of stock trading advice. Do not chase sudden move stocks. Vital rule to keep in mind. The idea is to buy stocks before movement. Stock prices go up because there are usually large amounts of people buying the stock. A slow, upward trending stock is different than a rapid uptick in cost. Rapid upticks have a tendency to proper very quickly. Or to plummet very fast. Always be suspect of rapid shifts in price.
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Retail sales for November came in at 0.2%. This number was a disappointment to the market but ultimately had little impact on stocks outside the retail sector. The S&P 500 is trading up 5 points on the day, just shy of a half-percent gain. All eyes continue to be on Europe and at 2:15pm ET today, the Federal Reserve will release their policy statement on interest rates.
Investors, traders and even institutions are feeling pain today after the markets collapsed for the second day in a row. Just days after the media proclaimed all was perfect in the world once more, poor economic news ripped the markets from China and the massive bailout of Greece may fall apart. The S&P 500 has fallen over 5% in the last two trading days. Just today, the SPDR S&P 500 ETF (AMEX:SPY) is trading at $122.00, -6.60 (-5.13%).
The stock market is gently floating higher today after a mega reversal yesterday. Most amateur and retail investors are scratching their heads, trying to understand why they keep getting whipped up and down in this market, losing money endlessly. To understand these moves, one must look at the charts. The charts are like a book, written in a foreign language. If you learn their language, you have the key to profits forever. In late trading yesterday, the S&P 500 staged a 40 point rally. The SPD
The markets opened sharply higher. The key to the markets higher open was a crushing of the Dollar that took place overnight. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.53, -0.14 (-0.65%), making a new 52 week low. A weaker Dollar is positive for the markets as stocks are treated like commodities in regards to Dollar fluctuations.
It was just three weeks ago when oil spiked higher, causing the market to sell sharply. As oil traded over $100 per barrel, the markets got jittery over fears it would crush a slowly recovering economy. Today, the markets are loving oil as they trade together, tick for tick. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $131.51, +0.53 (+0.40%). This is the high of the day. The United States Oil Fund LP (NYSE:USO) is trading at $41.83, +0.41 (+0.99%). This is also the high of the day.
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