Daily Issues

Institutional Money Continues to Sell at Any Opportunity

February 8, 2016

Stocks began today's session in liquidation mode, and the selling pressure was unrelenting until the final hour, when a modest rebound erased part of the sting.

Don't be fooled, however. That rebound was tepid, half-hearted and anemic at best. Professional money managers are selling everything that isn't nailed down.

There was no single driver of the sell-off. However, a ramp in credit concerns received a lot of attention. Some of the other usual suspects, such as concerns about monetary policy divergence between countries, the oil rout, a sluggish earnings backdrop and the risks of China exporting deflation, were blamed. Fairly, to be sure, but no single event triggered the hurricane of selling.

In today's Trader's Advantage, I'll share my expectations for where we'll go from here, as well as my latest recommendations for our trades, including the two options we just added in afternoon trading.

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The Line in the Sand

February 5, 2016

Investors were like Keystone Kops the past month: running around in circles, tripping over each other, bopping each other on the head and then running away. It's one of the most juvenile market environments ever – but, at the same time, one of the most deadly serious.

Today, the market drew a line in the sand when the S&P 500 came back to the 1,875 level again and lightly bounced. Based on recent history, from here, expect a robust rebound. But if one doesn't come, we're likely looking at a meltdown.

The seismic swings have made stop-losses tough, and we lost two trades today in the shuffle. But today's action provides one of two possibilities for the market's next move, and there should be a clear sense of which way to turn as soon as Monday. I talk about that in more detail in my latest podcast, so be sure to listen before reviewing our trades.

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Bulls Not Out of the Woods Yet

February 4, 2016

Stocks walked, ran, drove, swam, jumped, wriggled, log-rolled and spun their way higher on Thursday, taking a most circuitous route but ending right-side up. It wasn't pretty, and it wasn't neat, but it got the job done for bulls.

Or is that what they want you to think? Hmm?

No doubt investors are happy to see a 79 point gain on the Dow Jones Industrials line of their favorite finance website.

But if they check below the surface, or their own portfolios, they will see a much different picture. The S&P 500 was basically flat, up just 2 points. And the Nasdaq 100, star of last year, was down a good 0.75% most of the day, and only at the very end of the contest did it rise up to finish with a 4-point loss, or -0.1%.

Breadth was very mediocre, only around 3-2 favoring advancers, and there were still just 123 new one-year highs vs. 154 new lows.

In today's Trader's Advantage, we'll discuss a new trade and review two short positions to cover.

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Which of the following sectors of the market do you think will outperform for the balance of 2015?

  • Utilities
  • Energy
  • Healthcare
  • Technology
  • Financials
  • Industrials