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Another Wacky Day in the Stock Market

NEW YORK (TheStreet) -- The stock indexes on Monday all closed higher on the day with the Russell 2000 leading the way, up 1.04% to close at 1114.43.

The Russell 2000 was followed by the Nasdaq, up 0.86% to close at 4125.81. The DJIA closed up 20.55 points at 16511.86 and the S&P 500 finished higher by 7.22 points at 1885.08.

It was no surprise the Russell 2000 and the Nasdaq finished stronger on the day since both of those indexes had been oversold according to my internal algorithm indicators. Both indexes, however, are still well into Trend Bearish territory.

What was interesting on this trading day was that the momentum stocks continued to move higher off of their move higher last week.

Apple (AAPL) gained 7 points. This was the fifth consecutive Monday that AAPL has finished higher. Netflix (NFLX)gained 14.62 points and Facebook (FB) was higher by $1.19.

The most fascinating fact of the day was the S&P 500 Trust Series ETF (SPY) had its second-lowest volume day of 2014, barely eclipsing the Jan. 22, 2014 volume by 800 million shares.

What does this all mean? Please do not get to excited by the movement on Monday in the indexes or the momentum stocks. Except for AAPL, the stocks that were mentioned are all in Trend Bearish formation, a three-month or longer time frame. Thus, an upward bias with a bearish trend.

This entire trading week may prove to be a very slow. With the Memorial Day weekend quickly approaching, the markets can be whipped around easily on low volume. So, buy the dips and sell the rips. This is a traders market in 2014 and overextending your stay may prove costly.

A risk management process that works is critical. You must know when to buy and sell within this volatile market in 2014. Chasing momentum stocks has been the wrong philosophy in 2014. Momentum stocks have not been the best performing sector in 2014. The "Growth Slowing" sectors, as I have mentioned, are the best performers in 2014. I am speaking of utilities and real estate investment trusts.

Do not forget about the inflation accelerating scenario. The S&P Goldman Sachs Crude Oil Trust Index ETF (OIL) is up 6% for the year to date, along with other inflationary sectors such as coffee, wheat and corn.

Be careful out there in your trading. This market is not what it appears to be in 2014 for growth. Fade the Federal Reserve and do not listen to what it says.

On Monday I added to my Female Health Company (FHCO) long position when it was red. I sold that added position for a 2% gain and retain my original position. I also purchased First Solar Inc. (FSLR) with an extreme oversold algo number. I currently am long the position. All positions are time stamped at

At the time of publication the author had a position in FHCO and FSLR.

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

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SPY $209.56 0.11%
AAPL $117.81 -0.19%
FB $105.45 0.04%
GOOG $750.26 0.28%
TSLA $231.61 0.86%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

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