Portfolios Under Pressure

On Friday, finished one of the best quarters lived Wall Street in recent times. In this period, the DJ-30 climbed 8.1%, the SP-500 increased 12% and the Nasdaq Comp. increased by 18.7%. With these numbers, not surprisingly, the performance of some of thetechnological companies (and others) most important. For example, Priceline.com: +53%, Sears: +108%; Apple: +48%; Fossil: +66% to name a few.


This period was marked, however for some major risks identified by many investors and traders. On the one hand, was a period with a daily volume extremely low. It is generally recognized that a period of price growth is healthy in the stock market, when it comes accompanied by a high volume of shares traded.


In the case of DJ-30, the volume during this period was the lowest since the fourth quarter of 1999 and almost 18% less than the volume in the same quarter last year. In the SP-500, the volume of this quarter was 23% lower than the first quarter of 2011 and the lowest since September 1999. A volume traded as low was a source of mistrust and constant observations from large investors and traders.

Furthermore, the volatility was also very low during the entire period. A low level of volatility has two effects on the market. On the one hand, strikes the volume, to scare off day traders.


Also, a low level of volatility has been interpreted generally as a good time to sell stocks.Therefore, discourages the entry of new capital into the market, making progress towards the top.

Moreover, during these last few months, Europe has faced a number of problems associated with debt from various countries. The problem and Greece was permanently present. Also, doubts arose with regard to Italy, Spain and Portugal recently (again).

Despite all these questions, the market climbed, climbed and continued to rise during the first three months of this year. Only in the last two weeks, the stock market hasstarted to behave as normal. That is, some days and other days going down. Obviously, the risk of a correction begins to appear.

Logically, after more than three months of growth continuous case, if there is a change in the pattern of prices, this fear is generated. Additionally, a new earnings season is about to start and this always creates some uncertainty. This probably results in an increased daily volatility.  But there are many traders who think the market will continue to grow in April. 

What I have seen it is a certain "distribution" primarily in stocks of medium and small companies. In technical terms, the Russell-2000 is the index that shows further deterioration, followed by the Nasdaq. Both indices are in a position limit. Break the support level of SMA 18 days or bounce and continue their way up. This should define the week begins.