Large Cap Stocks Continue The Charge Lower

Quadruple witching Friday added a bit of fury to the market’s fire. Since March, witching Friday has brought on higher volume up days or follow-through days. Heading into Friday many were expecting the market to rise. Stocks had a different idea. More fear about rising crude oil prices, Israel’s dry run (Military exercise; attack on Iran), and more worries about the economy. The higher volume sell off didn’t take out the Nasdaq’s previous attempted rally lows. However, the action on Friday has completely knocked out this rally attempt.

According to IBD the put/call ratio jumped above 1 to 1.25. Showing some significant fear levels, but VXN and VIX continue to lack the levels of real fear. New Lows obliterated New Highs: 495 NL to 69 NH. These are the sort of numbers you would like to see when you are trying to get a new bull market. Our Monster Stocks are solely in oil and gas small cap stocks. Large Cap stocks are lagging and dragging this market down!

Cash is certainly king in this type of environment. Choppy and directionless markets are very difficult to navigate. One week you are riding high the next week you get washed out. Its best not to run in place and sit on the sidelines and not be over invested in this market.

Its summer time, I’d rather be enjoying the warmth of the sun than watching this market get hacked to death. Until we can get some real fear, via VIX/VXN than I am not sure we are going to get much going on the long side. In addition, NH/NL must pick up and show some real strength. Too much weakness in key “internals” and the news media pounding the table we are still in a recession it will be too much for the market to muster a real strong rally.

Posted in Categories: Contributor, External Research, Stocks.

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