Market Sentiment (Stocks on NYSE, NASDAQ, AMEX)
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May 2, 2016, 2:12 p.m. EDT

Nasdaq action is normal, with one notable exception

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About Kevin Marder

Kevin Marder is a guest columnist and a co-founder of MarketWatch. He is principal of Marder Investment Advisors Corp. and a contributor to The Gilmo Report. Previously, he served as chief market strategist for Ladenburg Thalmann Co. and developed institutional fixed-income risk management software for Capital Management Sciences.

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For weeks, the concern here has been the lack of volume on this 11-week advance off the Feb. 11 lows in the averages. It becomes a concern when a market rally reaches the eight- or 10-week point without showing at least a few days of professional buying (accumulation) to keep everyone honest.

Over the past half-dozen sessions, this problem came home to roost, as the Nasdaq Composite's volume was elevated while the market came off. This is a sign of institutional selling.

For a larger chart, please click here .

Chart created using TradeStation . ©TradeStation Technologies, 2001-2016. All rights reserved.

To be fair, an advance going 11 weeks without at least a 3%-5% reaction certainly deserves one. At the same time, speculators will want to keep an eye on the price/volume behavior of the averages to see how extensive this selling may become.

If there was a positive last week, it was Friday's Nasdaq Composite close at the midpoint of the day's high and low. The S&P 500 closed even higher up in its intraday range. This is interpreted as supportive action. That the Nasdaq reversal occurred right at the 50-day moving average line is trivial in importance, as it does not enter in the big picture.

To wit, the big picture is about trends and accumulation/distribution in the averages, market momentum, and the identity and action of the leading stocks.

In terms of leadership, the broad sectors showing outperformance are adhering to a textbook script on what a late-cycle bull market looks like. Energy /zigman2/quotes/206420077/composite XLE -1.06%  , industrial /zigman2/quotes/202026558/composite XLI -1.33%   and basic materials /zigman2/quotes/204467551/composite XLB -2.40%   lead the way higher.

A number of senior growth stocks, meanwhile, showed distribution in line with the averages last week, including Google /zigman2/quotes/202490156/composite GOOGL -2.18%  , Nike /zigman2/quotes/203439053/composite NKE -1.60%  , Starbucks /zigman2/quotes/207508890/composite SBUX -3.00%   and Netflix /zigman2/quotes/202353025/composite NFLX -2.25%  , resulting in Thursday's tweet below:

https://twitter.com/mardermarket/status/725888630116356096

Too, some recent breakouts ended up in failure as price returned to the basing patterns from which they had broken out. These include Inphi /zigman2/quotes/208445412/composite IPHI +0.68% , Emergent Biosolutions /zigman2/quotes/204817890/composite EBS +1.10% , LKQ /zigman2/quotes/210317139/composite LKQ -6.27% , Global Payments /zigman2/quotes/201234787/composite GPN -3.36% , Granite Construction /zigman2/quotes/200569846/composite GVA -8.97% , Exlservice Holdings /zigman2/quotes/207306159/composite EXLS -7.08% and Maxlinear /zigman2/quotes/200823803/composite MXL -1.65%  .

Among the names, Paycom Software /zigman2/quotes/208108773/composite PAYC -8.97% is a developer of human capital management software that came public two years ago at 15. The shares closed Friday at 38.21.

Most analysts who follow the Midwestern company forecast 35% earnings growth for this year and 37% next year. Top-line growth has been quite steady given its extent: The last six quarters have seen revenue expand 42%, 45%, 49%, 47%, 51% and 48%, respectively.

Technically, while the stock is building a five-month base, the shares do not offer attractive entrance. Even so, earnings are expected out this week, and taking a position ahead of this impending report would add unnecessary risk.

The Paycom thesis revolves around the fat growth estimates forecast by Wall Street. This is corroborated by a 70% run up since the Feb. 11 market low. This is a name that deserves a spot on an aggressive speculator's watch list.

/zigman2/quotes/206420077/composite
US : U.S.: NYSE Arca
$ 29.83
-0.32 -1.06%
Volume: 63.83M
April 3, 2020 8:00p
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/zigman2/quotes/202026558/composite
US : U.S.: NYSE Arca
$ 56.34
-0.76 -1.33%
Volume: 15.91M
April 3, 2020 8:00p
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/zigman2/quotes/204467551/composite
US : U.S.: NYSE Arca
$ 42.61
-1.05 -2.40%
Volume: 9.27M
April 3, 2020 8:00p
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/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,092.70
-24.33 -2.18%
Volume: 2.57M
April 3, 2020 4:00p
P/E Ratio
22.22
Dividend Yield
N/A
Market Cap
$769.02 billion
Rev. per Employee
$1.39M
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/zigman2/quotes/203439053/composite
US : U.S.: NYSE
$ 78.86
-1.28 -1.60%
Volume: 8.48M
April 3, 2020 6:30p
P/E Ratio
29.20
Dividend Yield
1.24%
Market Cap
$122.81 billion
Rev. per Employee
$529,466
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/zigman2/quotes/207508890/composite
US : U.S.: Nasdaq
$ 63.05
-1.95 -3.00%
Volume: 14.68M
April 3, 2020 4:00p
P/E Ratio
20.61
Dividend Yield
2.60%
Market Cap
$74.00 billion
Rev. per Employee
$86,863
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/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 361.76
-8.32 -2.25%
Volume: 4.86M
April 3, 2020 4:00p
P/E Ratio
87.51
Dividend Yield
N/A
Market Cap
$158.74 billion
Rev. per Employee
$2.22M
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/zigman2/quotes/208445412/composite
US : U.S.: NYSE
$ 80.03
+0.54 +0.68%
Volume: 845,067
April 3, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.69 billion
Rev. per Employee
$507,741
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/zigman2/quotes/204817890/composite
US : U.S.: NYSE
$ 57.66
+0.63 +1.10%
Volume: 363,085
April 3, 2020 6:30p
P/E Ratio
56.23
Dividend Yield
N/A
Market Cap
$3.00 billion
Rev. per Employee
$458,886
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/zigman2/quotes/210317139/composite
US : U.S.: Nasdaq
$ 17.35
-1.16 -6.27%
Volume: 2.90M
April 3, 2020 4:00p
P/E Ratio
9.96
Dividend Yield
N/A
Market Cap
$5.34 billion
Rev. per Employee
$232,876
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/zigman2/quotes/201234787/composite
US : U.S.: NYSE
$ 126.30
-4.39 -3.36%
Volume: 2.22M
April 3, 2020 6:30p
P/E Ratio
53.63
Dividend Yield
0.62%
Market Cap
$37.91 billion
Rev. per Employee
$306,033
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/zigman2/quotes/200569846/composite
US : U.S.: NYSE
$ 14.10
-1.39 -8.97%
Volume: 860,326
April 3, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
3.69%
Market Cap
$659.05 million
Rev. per Employee
$582,178
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/zigman2/quotes/207306159/composite
US : U.S.: Nasdaq
$ 46.70
-3.56 -7.08%
Volume: 320,689
April 3, 2020 4:00p
P/E Ratio
23.97
Dividend Yield
N/A
Market Cap
$1.60 billion
Rev. per Employee
$30,348
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/zigman2/quotes/200823803/composite
US : U.S.: NYSE
$ 10.72
-0.18 -1.65%
Volume: 357,198
April 3, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$771.27 million
Rev. per Employee
$520,970
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/zigman2/quotes/208108773/composite
US : U.S.: NYSE
$ 165.01
-16.25 -8.97%
Volume: 1.89M
April 3, 2020 6:30p
P/E Ratio
53.38
Dividend Yield
N/A
Market Cap
$9.71 billion
Rev. per Employee
$185,684
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