The Big Picture (12/9)
Stocks Rise On Strong Data, But Volume Is Missing
By PAUL WHITFIELD, INVESTOR'S BUSINESS DAILY
Posted 12/06/2013 06:49 PM ET
Stocks kept to their recent puzzling action, tucking Friday's gains inside
lower volume with leaders flashing contradictory moves.
The Nasdaq rose 0.7%, good enough to erase the week's losses. The S&P 500
leapt 1.1%, rubbing out most of the week's losses. The IBD 50 inched up 0.1%.
Volume fell across the board.
Economic news was mostly bullish Friday. Payrolls for November topped the
high end of the Street's estimates. The University of Michigan's consumer
sentiment survey also beat the high end of the estimate range. Personal
income for October, however, was worse than the low end of estimates.
Media headlines made much of the payroll beat, but the lower volume on the
stock exchanges pointed to an apathetic reaction from the big money.
Time, more than news, is shaping up as a friend for this conflicted market.
The Nasdaq and the S&P 500 shed some distribution days because of time
during the past week. But they also picked up some fresh distribution days.
In the long run, swapping old distribution for new distribution isn't a good
trade. But it does keep the market uptrend alive.
Recent market action has been puzzling. Distribution has marred four of the
past 10 sessions, but the indexes remain close to their 52-week highs.
The indexes are also having trouble staying on the same page. After Nov. 13,
when the uptrend resumed, there hasn't been a single day of sizable gains
in rising volume for both indexes. If one index is delivering gains, the
other decides to sit it out, either by lacking volume or price.
Leaders also are a mixed bag. While a handful have rolled higher during the
resumed uptrend — Nu Skin (NUS) up 17%, Biogen (BIIB) up 23% — a few
others have suffered blowouts or slow leaks.
Ulta Beauty (ULTA) plunged 20.5% in monster volume Friday after fiscal Q3
results missed on the top and bottom lines and guidance was weak. Results
were reported after hours Thursday.
Proto Labs (PRLB) has used the resumed uptrend as a signal to sag steadily
south. It's 19% off its high.
Amid these contradictions, investors are best off negotiating the market on
a case-by-case basis.
If a stock drops 8% from your buy point, sell it. If it threatens to turn a
decent gain into a loss, lock in the small gain. If it reaches the 20%
profit level and doesn't appear to have the qualities of a big winner, take
the profit. If a stock continues to hold up well and you are convinced it
could be a big winner, give it room to run.
If you do open a new position, it should be a stock of the highest quality.
Don't compromise in order to find buy candidates.
