Major averages fell yesterday on mixed volume. Both indexes gapped up at the opening but could not hold their gains by the close. The S&P 500 and the NASDAQ both closed down on the day but the NASDAQ is currently holding above its 50-day moving average. The indexes remain in "no-man's land" as they continue to chop around. Individual stocks, meanwhile, are a mixed bag of sorts.
Intercept Pharmaceuticals (ICPT) gapped up 45.5% but then closed up only 16.6%. We did not report on this due to its huge volatility. Retailer Kate Spade (KATE) had a gap up after a strong earnings report but it could not hold its gap up thus should have been sold after closing its gap, especially given the aggressive downside volume that occurred as it closed the gap. As in all things, discipline is key when trading stocks as even in the best of environments such as in the late 1990s, typically half of your buys will eventually be sold due to lagging or downside behavior.
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