April 2012 Chopfest Continues

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Apple’s earnings are obviously lending a hand to almost every asset on earth today – only Apple can fix Spain, at least for a day.  All of yesterday’s wretched PMI numbers globally are but a memory as long as China gobbles up iPhones.  What is bemusing is watching stocks like Chipotle and Priceline ramp off of Apple, which happened in after hours yesterday – as if there is any business relation.  However they are all part of the growth stock class so they tend to move together, and you can’t argue with computer programs in this day and age.

Yesterday was one of the stranger days of the year – almost the entire “Investors Business Daily” group of stocks were hit, and hit very hard – in a somewhat benign tape.   And on very high volume. It “felt” like some big player who focuses on this area was forced into liquidation as the selling was very sloppy.   You don’t expect a relatively staid stock like Nike (NKE) to be slammed like it was yesterday, when the general market was just hanging around.   I am really not quite sure what to make of the action to all of these stocks yesterday.  It did do a lot of damage to a lot of (up til then) decent charts.

As for the broader index, we are continuing the chopfest of April 2012.  The gap down from Monday morning will indeed get filled here, 2 sessions later.  That did not take long at all.  Each time this market seems poised to finally fall off – buyers show up.  Each time it seems ready to pop out of the top of the range – sellers come in.   The longer this goes without the bottom falling out and the bears making real progress, the less viability of this bear flag following through and instead we go with a correction based more on time rather than price.  That said, the market needs to identify the next group of leaders to lead the next leg.

While a lot of individual names have been hit quite hard, money has rotated into other areas, keeping the correction to the indexes contained.  Yesterday’s leadership looked very similar to December 2011 – utilities, REITs, defensive stocks with yield.  If that’s a one day wonder, or the beginning of a change – we’ll see.

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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog