Stock Market Summary Wednesday 10th October 2012

Posted by Stephen Sutherland on Wed, Oct 10, 2012 @ 10:03 AM
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Yesterday's market action was negative.

The Nasdaq Composite fell 1.52% in average trade indicating institutional selling (Point A).

As I mentioned in the last two Daily Market Updates, guests on financial shows such as CNBC had been getting very bullish, this always makes me nervous because usually it means we are going to head lower. Once again there overly bullish talk has coincided with a short-term top.

Leading stocks action was neutral. Market leader Apple acted much better than late, bullishly reversing during the session, helping it end the day with a miniscule loss. This tells me that the market will probably find support soon.

I'm hoping that the last three days of falls will have helped remove the excessive optimism that had built up. Too much bullishness always spells disaster. Even with three days of straight losses, in my opinion, the market has not changed its personality. Instead it's just going through a period where it needs to throw out a few investors who came late to the party.

With the Nasdaq falling through its 50 day moving average yesterday, I'm expecting to see support arrive soon. Should the market fall further, I'd like to see a lot of aggressive buying between 3000 and 3040 (Point B) which is an area just slightly below where the market is currently trading. Because I believe the market will rebound soon, my short-term stance is now neutral.

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Topics: Stock Market Summary