Lateral But Stable...

Jack Steiman from SwingTradeOnline.com at 01/07/10

And that's not to be diminished in its importance. You don't have to keep blasting higher all the time to say that things look good. The 60-minute time frame charts got very overbought again and thus it is no surprise that the market didn't rocket up today, but all in all the action was solid for some very important reasons I will discuss later in this report. We started out with a small move down today but it didn't take long for the churning to begin once the initial sellers did their deed. The Nasdaq sold hardest but that didn't stop the other indexes from hanging in there. In fact, the Nasdaq ended up down only 7 points, but when you consider how some of its leaders acted, it has to be considered a victory for the bulls. Bottom line is the market continues its basic lateral consolidation as the oscillators play up and unwind.

Now let’s spend a moment talking about why you have to be thrilled if you're a bull based on the overall action on the Nasdaq today. Leaders such as Google (GOOG) and Apple (AAPL) got smoked hard. Lots of weighting there and with GOOG down almost 17 points and AAPL down over 3 points, that's quite a bit of pressure on the index. These are strongly weighted stocks thus how can you feel badly about the overall Nasdaq action! It could have been much worse without question.

In addition, the weakness in the Nasdaq leaders had no adverse affects on the other indexes and that too is a positive. The action here being quite similar to what took place for some time with regards to the financial stocks. They were acting poorly with just about every leader and every ETF presenting those stocks trading below their 50-day exponential moving averages yet the markets overall held up very well. When AAPL and GOOG are down a combined 20 points, you wouldn't expect the Nasdaq to be down only a drop over three tenths of one percent.

We're heading in to earnings season and one area of the market well worth paying close attention to is the retail sector. Are folks still spending there? Has spending increased from the last year at this time? We got a very important report tonight from Bed Bath & Beyond (BBBY) and the news was fabulous. Much better than expected earnings with the stock acting very well in the after hours. Up nearly 9%. Nothing but good news there. This does not mean this will be normal for the rest of the sector but it is a nice way to begin the earnings season. In addition, construction company Shaw group (SHAW) is also blasting off in the after hours after reporting their earnings this evening.

We have the monthly Retail Sales Report out tomorrow morning and the big Jobs Report out on Friday morning. Two key reports for the market to focus on. Both should be fairly big market movers with the Jobs Report probably meaning more to the market overall but retail sales in the morning tomorrow has strong significance as well. All we can do as players is to play what we're seeing day to day with the charts being our guide first and foremost. Nothing in the world of charts suggests anything too nasty to come on the down side although pullback's are always going to be part of the game. Sticking with what I see as always. That's all I can do. When we get the reversal stick that says we need to go cash or possibly short, I'll adjust to it. Not before.