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Who would ever have believed that a market in a confirmed down trend could withstand a terrorist attack and actually hold its own? Today, 50-56% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes actually advanced, far above yesterday’s performance. In fact, only 7% of Dow 30 stocks rose on Wednesday, compared to 50% on Thursday. There were 173 new yearly highs in my universe of 4,000 stocks and only 28 new lows. Yes, we are in day 9 (D-9) of the QQQQ decline, but 55% of its stocks advanced today. And 109 of the 186 stocks that hit a new high 10 days ago closed higher today than they closed 10 days ago. So there is a lot of strength under the surface………………………………
So where was the strength today? I looked at the industries represented among the 173 stocks that hit a new high today. I found that 7 stocks in the apparel industry hit new highs: ANF,DBRN,SCVL,STGS,CHS,MW,CHRS. There were 13 stocks in the independent oil and gas sector: ECA,NXY,UPL,SFY,TLM,PTF,CNQ,SWN, SM,APC,XTXI,DVN,PVX. Oil and gas equipment services had 11: BHI,NGS,SOSA,PAA,PPX,WMB,TMG,KMP,HOC,TNT,PCZ. While not as many, the investment brokerage stocks were also strong: TRAD,SCH,ET,LM,AGE. It would seem to me that the sectors that have a lot of new highs on a day like this are sending signals of future strength. As for me, I added to some of my positions that rose today. While the markets are in a down trend, it appears that the stocks that will report good earnings will buck the trend, at least until their earnings come out. If stocks were going to decline more near term, I think the market had the perfect excuse to do so today–and it did not.
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Please remember that the stock market is a risky place, especially now. I am not providing recommendations for you to follow. My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs. While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog. Please consult with your financial adviser and a mental health practitioner before you enter the stock market, and please do not take unaffordable risks in the current market environment. See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.