The bearish sentiment is still at large as the market failed to break yesterday's high with its effort in the early part of trading day.
The day started with the December wholesale inventory report that came in higher than expected. This wasn't the only economic data reported this week that pointed towards a slow down in the economy. The reaction to the report, however, was mild. For the second day in a row, the market traded sideways on less than stellar volume. There was no clear reason to buy or sell. Nonetheless, major indices ever so slightly drifted - almost unnoticeably - LOWER.
Nasdaq managed to attract buyers today as the recovery in Cisco seems to have calmed the investors after the technical breakdown occurred earlier in the week. Jon Najarian also mentioned today that the option traders are getting out of Feb puts and moving into Mar puts. Thus, indicating that a further decline in Nasdaq is not to be expected until after upcoming options expiration week for February options. This temporary one week time frame may offer opportunity for short term traders to play the bounce on names like GOOG & AAPL. Just remember that not all technology stocks work in this environment nor will it last longer than a couple of days.
Looking ahead, Energy stocks and Gold stocks seem to be on the move up again. The price of oil closed near $92 as OPEC intends on keeping it above $80 a barrel. It is unclear as to whether the $100 per barrel will once again be touched but the short term trend seems to be to the upside. Even so, the Energy sector as a whole seems to offer a mixed bag of stocks. I think VLO, and TSO will work here while XOM may not. It looks as though selectivity will be key in the Energy sector.
The Gold stocks, on the other hand, all seem to be ready to stampede out of the gate. Gold looks poised to take off to the next price level, putting an end to a much needed consolidation at the $900 range. How high will Gold prices rise? I do not know. However, this may be a forthcoming sign of weakness in the stock market and dare I say, the possibility of another Fed rate cut.
Rino Choi
Titans of Wallstreet market columnist
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