The Market Stays Aloft

 | Jul 03, 2013 | 1:21 PM EDT  | Comments
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regi

It is dangerous to draw any major conclusions from a thin half day of trading, but it was a decent day for the bulls, and it keeps the V-shaped bounce in play.

The indices were weak early after poor news out of Europe but gained traction and tried for a strong finish but faded late in the session once again. We have not had a strong close in weeks, and that is a bit troublesome, but so far it hasn't been predictive of anything dire. Breadth, which has been good lately, struggled today as traders were much more selective in the thin environment.

Unfortunately, the Friday session, which no one really wants to trade, is of some importance because of the release of the monthly jobs report. Because of the fear of Fed tapering, we have to deal with the potential that good news may not be market-friendly.

The indices are dealing with some overhead resistance now, and that is likely to keep us contained, but selective stock-picking is working fairly well. It is probably a good time to stay focused on the micro rather than the macro. We have earnings coming up soon, and that should add a little excitement, but right now the main focus of the market is on taking some time off for the holiday.

Have a great Fourth of July. I'll see on Friday.


July 03, 2013 | 10:34 AM EDT

Lean, Mean and Opportunistic

  • A few quick trades are all I'm looking for.

We knew it was going to be a slow day but the news out of Europe isn't helping matters. Half-day trading holiday sessions are often good for traders because there is no real news and a generally upbeat mood. Unfortunately, this morning we have to deal with Portuguese bond issues and better-than-expected jobs news, which raises the question of whether good employment news is bad for the market. Bonds are up slightly, so maybe the news isn't quite good enough to frighten the folks worried about Fed tapering.

As I mentioned, I cleared out quite a bit of inventory yesterday, so I'm lean, mean, and trying to be opportunistic. On a day like this, a few quick trades are all I'm looking for.

I added to a position this morning in CardioNet (BEAT), which provides cardiac monitoring services. The stock made a big move earlier this month on a deal with UnitedHealth (UNH) and is now pushing higher after healthy consolidation. Another small-cap on my radar is Renewal Energy (REGI), which produces biodiesel. It has a huge estimate of $2.84 for 2013 and is flirting with a breakout from a nice base.

These stocks are relatively thin but that can work well on a day like this, when traders are looking for fast action.


July 03, 2013 | 8:09 AM EDT

Today's Theme: Protect Profits

  • Expect market players to start the holiday early.

You have to love a nation that celebrates its Independence every July 4, not with a parade of guns, tanks, and soldiers who file by the White House in a show of strength and muscle, but with family picnics where kids throw Frisbees, the potato salad gets iffy, and the flies die from happiness. You may think you have overeaten, but it is patriotism. --Erma Bombeck

It has been a while since we have had a European sovereign debt scare, but this morning Portugal is shaking things up as yields on its 10-year bond rose sharply.

The timing provides a good excuse for sellers who have enjoyed a big bounce but now face technical resistance and time off for the Fourth of July holiday. As I wrote yesterday, it isn't a bad time to book gains and start fresh Monday.

The bounce over the past week has had some peculiarities. Most notably that there hasn't been a single strong close during the run and almost all the gains have occurred overnight. On the other hand, breadth has been strong and a number of individual stocks have performed well.

The tendency toward V-shaped moves has continued, but this time the market corrected deeper and the action is running lower on momentum as it tries to move back up through key levels. If the bears are going to roll things back over, they have their chance now with bad news on the wires and a thinner trading environment.

What has really helped the bulls this past 10 days or so is the fear of the Fed tapering off bond buying has subsided. Bonds have bounced and yields have fallen but we still aren't close to recouping the levels we were at when Ben Bernanke gave his seemingly benign press conference that caused such a big reaction. Interest rates are going to remain an issue, but the Fed is working hard to make sure the market doesn't become too emotional or fearful.

It's a poor start this morning and I expect that a number of market players will look at the red on the screens and decide that they should start the holiday early. Don't forget that the market closes at 1 p.m. EDT.

Some economic reports are coming that may move the action around a little, but the theme of the day is likely to be protecting profits. If you want to trade, stay nimble and play it tight.

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