The market bounced yesterday on mixed volume, with large-cap NASDAQ names helping to fuel a larger move in the NASDAQ Composite Index, while the S&P 500 lagged and the Dow closed down on the day. The bounce left much to be desired as the market sold off the rest of the day after an initial weak bounce with selling accelerating toward the close. The S&P 500 currently sits under its 50-day moving average and closed mid-range on lower volume, showing institutional money was reluctant to buy. Where the market eventually goes may largely be influenced by the Fed meeting minutes to be released later today as they may shed more light on how soon and in what manner the Fed may begin to taper quantitative easing. The markets are forward looking so price/volume in major averages and leading stocks is key. Futures are down this morning as the market continues to display a certain softness leading up to today’s Fed meeting minutes.
Lumber Liquidators (LL) had a pocket pivot, breaking out of a high handle. We have reported on LL in recent reports as it has had prior pocket pivots. However, buy signals in the current environment raise the question of whether one should be seeking to initiate new positions. On an objective basis, a pocket pivot is a pocket pivot, and may identify strongly acting names for reference when the market is able to regain its footing, but the level of actionability depends on whether one has a prior position in the stock and a profit cushion in that position as well as the general market context.