The following was an email from a fellow trader and Strategic Stock Trades. I find their point of view similar to what we have discussed in the Shark Den these last couple days. Enjoy.
Strategic Stock Trades
SST Email For 5/6/2014:
Good Evening: It was quite the day in the markets on Monday. From having the DJIA down 124 points early on, to closing up 17.66 points, This stock market is not for the amateurs.
Monday was a classic hedge fund, algorithm programmed machine day. When the markets were all on the downside early on, the programmed levels were hit and that prompted the buy programs.
With the buy levels hit, in unison, the short hedge funds came rushing in to buy. This is exactly how the hedge funds work. They all work together as one unit.
The one issue that continues to plague this market is lack of buying volume. Today saw the SPY have its 3rd lowest volume day of the year.
Where is all the buying conviction? It is simply not there.
Thus, we are stuck with a very difficult market environment to navigate. There is not a lot of inventory to buy and not a lot of inventory to short.
The Nasdaq and S&P 500 are the 2 indexes that are now in Overbought territory. That is a slight change as the rotation continues into the Nasdaq stocks. The DJIA actually had its algo number heading down today.
Growth Slowing with accelerating inflation continues to be the theme, although you will not hear that from the wall street pundits.
The spread today between the 10 year and 2 year bond was a whopping 216 basis points. That is Bearish for the financials. Can this market continue higher without the financials?
AAPL contunued its march higher, closing over $600 a share. Everybody and their mother is wanting AAPL now. It has been a long time since traders were tripping over each other to buy AAPL. By the way, AAPL goes 98.40 tomorrow on green.
So, we continue to do what we do: hit and run. UVXY was a great example of what we do.
I will see you in the morning.