Wednesday’s gap higher loses confidence

NASDAQ index starts with a nice gain of 1.5% as earning from Yahoo and Apple set the tone for the index and the markets overall, but before lunch┬áthe index┬álost it’s gains and was struggling to stay in the green. Large cap stock continue to be the challenge for the broad indexes and without some confidence being injected short term the downside is starting to take root. Yes, we remain in the trading range, but the inability to hold gains on positive earnings data doesn’t give me or others much confidence in holding stocks longer term. You could see in both Apple and Yahoo today the willingness to sell on the news versus more buyers stepping in on the news. The balance of the day will be of interest to see if the early selling continues or if the everyone is willing to just sit and wait for something to change the sentiment in the broad markets.

Chart

The Russell 2000 index also dropped 0.9% by lunch time… important to note it was one of the bright spots in the selling on Tuesday and now it looks to play catch up on the downside. Moved below the 1190 top of the range level and back to the 50 DMA. Again, this is showing a lack of willingness on investors behalves to take on risk.
Chart
The other move of note today has been the Volatility index moving back to the 18.01 mark. As you can see Monday it tested the 15.5 level of support and has since moved higher accompanied by some selling in the broad indexes. A lack of clarity remains and the trading in the indexes shows that as well. VXX has moved near the entry point of $32.40 short term and should the anxiety continue and the uncertainty grow.
Chart
The key is to remain patient and let this all unfold… The last six weeks have been a challenge for traders and investors. The longer this strings out, the greater the anxiety created and the higher volatility will rise. Emotions are easy to spot in the charts… how they will play out is pure speculation without some data that shows sustainable growth looking forward.