This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

That Was Fast -- Stocks Lose the 'Yellen Effect'

NEW YORK (TheStreet) -- Was this stock market performance on Thursday a surprise to you? If so, you have not been paying attention to the cautious tone that I have been highlighting in my articles. For the past two days all we have seen from the DJIA and the S&P 500 is a bullish reaction to the commentary from Federal Reserve Chair Janet Yellen.

As I have been mentioning, Janet Yellen's bullish tone for the economy does not reflect reality. There are certain indicators within the marketplace that are telling an entirely different story compared to the DJIA and the S&P 500.

A few of those indicators are the Select Consumer Discretionary ETF (XLY) and the Select Sector Utilities ETF (XLU).

There is no way the XLY would be in Trend Bearish territory if those stocks were signaling a bullish consumer economy. Keep in mind, Trend is a three-month or longer time frame. The XLU would not be a leading market indicator, with a 13% return year to date.

Those two indicators are the sign of a slowing economy. There is no dispute. If the stock market was on in a Trend Bullish mode, the growth momentum stocks would be leading this market higher such as Facebook (FB), Amazon (AMZN), Netflix (NFLX), Priceline (PCLN) and Google (GOOG). I can go on and on with examples. There is no need.

The Nasdaq and the Russell 2000 have this market correct. They are both Trend Bearish. The DJIA and S&P 500 will soon follow.

With that said, the markets had quite a turnaround today, without the DJIA. The DJIA closed up 32.43 points, after being up over 100 points early. The S&P turned red in the afternoon, closing down 2.58 points. The Nasdaq was down 16.18 after being up almost 44 points. The Russell 2000 closed down 11.12 points after being up 11.15 points.

The "Janet Yellen effect" has worn off.

This market is very treacherous. You must exercise extreme caution if you are of the bullish mindset. The indicators are not in your favor. Most Wall Street pundits are not being forthcoming when it comes to the market risk. As I have said repeatedly, volume has been a leading indicator for me. The lack of volume is the sign. You cannot have a rising stock market if the foundation, in this case, volume, is lacking. The fall will eventually happen.

On Wednesday I shorted Bloomin' Brands (BLMN). I covered that short today with a gain in excess of 1%. I also added to my long position in Cameco Corp (CCJ). I have an extraordinarily oversold signal, according to my algorithm process.

At the time of publication the author was long CCJ.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

>>Read more: Stocks Mixed as Tech Takes Dive and Yellen Remains Upbeat on Economy

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $124.24 0.70%
FB $83.01 0.11%
GOOG $555.17 -0.65%
TSLA $190.41 -2.00%
YHOO $44.47 0.61%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs