This Day On The Street
Continue to site
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

As Predicted, Stock Market Indexes Higher but on No Volume

NEW YORK (TheStreet) -- As mentioned in Tuesday's article, the fact that the stock market closed down on Tuesday with decelerating volume was bullish on the margin. With that down day on Tuesday, the stock market could resume its upward movement.

Well, Wednesday turned out to be an up day in the stock market, as predicted. The DJIA finished higher by 91.26 points to close at 16651.80 while the S&P 500 was higher by 12.97 at 1946.72. The Nasdaq finished up 44.88 to close at 4434.13 and the Russell 2000 was higher by 8.75 points at 1141.78.

However, a major negative was the up move on decelerating volume, a common theme for 2014. Just as the decelerating volume on the downside Tuesday was bullish, the decelerating volume on the upside Wednesday is bearish on the margin.

The S&P 500 Trust Series ETF (SPY) volume came in over 68 million shares, well below Monday and Tuesday's volume.

Must Read: Airline Stocks Soar, Boosting U.S. Stock Market Rally

Thus, traders should not get very excited about this move on Wednesday. As a matter of fact, the Russell 2000 index, on a green open Thursday, will be well into overbought territory, according to my risk management process.

There continue to be many "growth slowing" indicators in the economy. Macy's (M) reported earnings on Wednesday that were below estimates, and the stock was hit hard, closing down 5.51%. This is just one of many retail stocks that have missed estimates.

This will be another indicator that reinforces the issue that the next GDP report will continue to show a slowing economy.

If you believe what the Federal Reserve's growth forecasts are, you do that at your own risk. The Fed has been consistently wrong on growth by an average of 98 basis points since 2010.

In sum, with a green open on Thursday, the Russell 2000 will be overbought and the other indexes will be showing lower highs. I will continue to be cautious and opportunistic in trading.

This process has served my subscribers extremely well. Knowing when stocks are overbought and oversold makes trading a much easier game. Having the algorithm signals allows us to trade profitably.

On Wednesday, I sold most of my Mylan (MYL) and all of my Live Nation Entertainment (LYV) long positions for a very nice profit. Both stocks had an extraordinarily oversold algo number on Tuesday.

I also sold my Intel (INTC) and Coca-Cola (KO) for profits.

This is how we trade at www.strategicstocktrade.com.

On Wednesday, I started a new position in Direxion Small Cap Bear 3x (TZA) in anticipation of the overbought Russell 2000 index.

At the time of publication, the author was long MYL and TZA, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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
Only $9.95
14-Days Free
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
SYM TRADE IT LAST %CHG
AAPL $126.44 0.00%
FB $87.28 0.00%
GOOG $523.40 0.00%
TSLA $280.02 0.00%
YHOO $39.38 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs