Buy What You Know, Sell When You Don’t. This Week’s Market Volume.
Wednesday’s session was a bit of a mixed bag with the S&P 500 logging gains while the Nasdaq took a hit. Volume grew on both indices, however, with the Nasdaq narrowly avoiding the volume distribution category. The S&P came close, but conversely managed to narrowly avoid the accumulation category. This was a stark contrast to Tuesday’s across-the-board accumulation day, where both the Nasdaq and the S&P 500 were clearly on the same page.
The Nasdaq seemed weighed down by Netflix, which crashed on Wednesday from a severe earnings hit along with news of a “surprise” net loss of subscribers. I have yet to sign up for a Netflix account, and, with the incredible ever-growing amount of quality content available for free on YouTube, it’s unlikely I’ll be signing up for one anytime soon.
Tesla, on the other hand, is poised to pop this week from earnings after the bell. I saw 6 Teslas in one day while walking around Cambridge recently (not including the one parked in my neighbor’s driveway), which is a much different scene than the one or two you’d excitedly spot on the road in a week, just a few years ago.
Does this means that Americans now prefer going out for a drive over sitting at home watching movies? Well, it’s hard to say, though, for those who own TSLA and NFLX, I’m pretty sure both pastimes will ultimately survive. But it also doesn’t hurt to use a little common sense and the powers of your daily observations (as in “Buy what you know” a la Peter Lynch) in choosing stock names for your future portfolio.
Tuesday’s accumulation day has the potential to create a reversal in TVO, our volume oscillator, which has been on a downward path since the start of April. The fact that today’s follow up was more of a high volume churn, rather than more accumulation, may actual help set the stage for more institutional involvement at a slower pace. The “Wall of worry” needs to be climbed slowly or else, as what seemed to be the case earlier this month, profits are claimed too quickly causing the wall to tumble. – MD
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