Market up Despite Disappointing Friday Job Report, But What’s Next?

S&P1,437.92+5.80+0.40% Nasdaq3,136.42+0.61+0.02% Dow13,306.64+14.64+0.11% EUR/USD1.279-0.0027-0.21% Gold1,737.5034.90+2.05%


Despite the disappointing job report last Friday, the major U.S. indexes extended small gain after big high-volume rally from Thursday session although NASDAQ only eked out with little gain of 0.61 point. Three horsemen GOOG, AMZN and AAPL all reached the best level for the year. A few previous growth stocks that got hit hard on the last earning reports like CMG, PCLN, and ISRG went up big, trying to catch up with market rally, and the beaten down and China-growth related stocks such as CLF, CAT, JOY and FCX ran up hard on the news of China’s recent announcement of a $150 billion stimulus plan. Banks were strong.

Everyone knows that the market tends to climb on the wall of worry. But in order to have a sustained rally before the year end, it’s healthier to see a nice pullback after the multi-month run up since early June. 

As the rally keeps going, some forgotten dogs are flying while a few stocks on IBD 50 ‘s top list started reversing seen in FRAN and MLNX, and the later was downgraded Friday with 8% loss on heavy volume align with INTC’s sell off on the revenue warning. It was the main reason I shorted MLNX stock when it gapped down on big volume. After hour Friday, KORS announced secondary offerings which cause 3% drop from its year high closing price. AAPL was up yet acted choppy, much less powerful than GOOG and AMZN. What will AAPL act during the week of its iPhone 5 release? I want to watch and see instead of predicting its 720 price target.

While the rally party is lasting, I can’t help but remember what William O’Neil used to say: “When the forgotten old dogs begin to bark & spearhead the market’s advance, the stock market is on its last feeble legs.” As the put/call ratio dropped near to its recent lows, VIX went down big, and Fed two-day meeting is coming, we should see some volatile trading sessions while the rotation is going on big time.

It’s good and important to raise stops and to take some profit off on the way up especially on the parabolic moves. Always be flexible and be objective. Trade smaller on the choppy price action.

The MLNX chart below demonstrates how a parabolic move could be damaged so quickly when not paying attention. If the chart doesn’t show, please click the link to see: .

MLNX Daily Chart - a Big Sell off on Volume Below its SMA 21-day

Best luck on trading!



About Angela Zhou @z8angela on Twitter

I am a full-time swing/day trader trading stocks & options. I got into stock trading/investing since the internet bubble in 1998. I am optimistic in life and objective in trading. The purpose of this blog site is for me to share my trading experience and market view with others. I may write something about life experience and living, too. My motto is: A Great Mind Becomes a Great Fortune. I love people and life, and I appreciate beauty in everything. Thank you for viewing!
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