The market fell again on Thursday, but volume was lower. The S&P 500 closed a hair beneath its 50-day moving average, while the NASDAQ Composite is now firmly below its 50-day moving average. When comparing the current sell-off to prior sell-offs in 2013, the market is at a point that has previously been the juncture at which the market finds its footing due to effects from quantitative easing, thus the Market Direction Model has remained on a buy. That said, should selling pressure increase in the days ahead, the MDM will account for this and act accordingly.
Economic data on Thursday were all under expectations. Jobless claims, the Philadelphia Fed's manufacturing survey and leading indicators all missed forecasts. With the economy still stumbling, and inflation low, the Fed has headroom for continued quantitative easing, and according to certain Fed heads, room to increase their asset purchases.
Leading stocks continue to take a pummeling, with the formerly leading housing-related stocks taking more heat, but few areas of the market have been immune to the selling. Apple (AAPL) headed lower and is now 44% under its all-time high achieved last August. The diminishing stock price means that AAPL also now only represents a 6.5% weighting in the NASDAQ Composite. Nevertheless, it has be a contributing factor to the underperformance of this index relative to the S&P 500.
Gold is rebounding as selling may have reached a climax earlier in the week, and stock futures this morning are rebounding on the heels of a positive Google (GOOG) earnings report last night. So far the market remains in a corrective state, and on an individual stock basis there is nothing in the way of new or actionable buy points as most leading stocks are out of position. Caution continues to be warranted at this time.