Stocks Slip As Traders Limped Into The Holiday Weekend

After a dismal report out of DELL (DELL) Thursday night technology stocks took the que and sold off.  Apple (AAPL) and Google (GOOG) both slid dragging down the NASDAQ 100 with them.  Once again crude oil continue to fail to hold onto its day high.  As crude pulled back from its highs it eased the pain for stocks and assisted them off the lows of the session. Both stocks and crude oil are acting bearishly, most notably crude oil over the past few weeks is EXTREMELY BEARISH. 

The market has largely ignored any rumors coming from the banks about possible write downs in the near future.  With Lehman Brothers (LEH) reporting in September it will certainly set the tone for other Brokerage Houses’ earnings reports.  This past week has been traded on very little volume its price action has certainly shown its true colors.  Price action is looking very bearish, this market remains suspect and until we get volume in either direction, we’ll be stuck in limbo.

Trying to make a stand on this market either bullish or bearish is extremely dangerous.  Low volume markets do not support any trend; bull or bear.  In fact, this confirmed market rally has failed to show the type of volume needed to support a new bull market.  Price and volume are most important when gauging a trend in the market.  If the two do not move in tandem, the direction price is moving may not be sustainable and caution should be exercised.

Secondary indicators to price and volume are New Highs vs New lows, Volitility Indexes, and Puts versus Calls ratio.  These are not meant to replace price and volume but merely as a secondary indicator to confirm what price and volume are showing.  At the moment, we have an unfavorable NH vs NL ratio, VIX (^VIX) and VXN (^VXN) have shown a lack of fear at our lows, and the same goes with the Put/Call ratio.  This market has a tremendos amount of headwinds and it will take a lot of work to push through those winds.

Have a safe and enjoyable Labor Day weekend.

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