Yesterday's gains came in sharply lower NYSE volume. The market needs up days on higher volume, down days on soft volume, if the rally is to survive. Not the opposite. pay$
BIG volume came into the market today lending further credence to the fledging rally. The Nasdaq's gains lifted that index above its 50-day moving average, the first time it has closed above that line since Feb. 12. The NYSE composite and S&P 500 touched their own 50-day lines and closed just below them. The market still has work to do to confirm its strength. Most notably, leading stocks need to start flexing some muscle. Much of the market's gains in the past few days have come from beaten-down stocks now bouncing off recent lows.
Pretty much all we could hope for were modest losses on easing volume - an "inside day". After recent heady gains, indexes came down to settle at previous resistance turned support.
Friday's action and the week, Stocks sank in higher volume Friday, marking the second recent distribution day for the S&P 500 and Nasdaq, despite a week of gains for the market. The S&P 500 and the Nasdaq marked higher-volume losses March 16. Two down days in higher volume over a short period aren't a good sign. That's especially a concern with the distribution days coming so soon after the March 12 market follow-through. Those two bouts of distribution created a feeling of stealth negative action, despite the market's price gains for the week. So too did the Nasdaq's close below its 50-day moving average. Regarding Geithner's plan to deal with toxic assets to be unveiled early next week, A disappointing plan could set the stage for a sharp, swift slide in the stock market, but a well-designed one could serve as a catalyst for further gains. Here is what I am seeing, REALLY...from my KC charts, indexes have NOT closed above support. Watch to lighten up where appropriate. If this thing washes out - it will be a GOOD thing. No sense going through such a severe Bear Market and not get rid of ALL the froth. Pay$ense
Many here do not indicate they give a hoot about the Stock Market's mid- to long- term projections. These are probably the stubborn types with money that are on quiet having not foreseen or traded out of the 50% slump we've just experienced. No doubt many heart attacks have occurred as you will see these "investors" close out positions on the way up as they near their <i>breakeven</i> point. Good luck with that! Not much to worry about. . .C is up $.57 inthe pre-market or nearly 22%. That being said, I DO consider the market and it's <b>longer-than-2-minute</b> time frame. Currently, the indexes are trying to put in a bottom. Here is what to look for if this is successful: Keep a close watch on price and volume as each upcoming day transpires - and for signs of any emerging leadership. Leading growth stocks sport top technicals and fundamentals. A market uptrend rarely goes far without the support of leading stocks. Few top-rated stocks have built healthy bases, let alone broken out to new highs. All of that means your best course of action is to let the market come to you. If the market builds on the prior weeks' gains and starts yielding more breakouts, you'll have plenty of chances to profit with well-timed buys. Look to see if leading stocks are rebounding off 10-week moving averages. Some top stocks are still low in their potential bases. That's OK. History shows that the best stocks break out up to 13 weeks after the follow-through day. Keep in mind, recent gains have been brisk. We may get a resumption of the rally, simply because many stocks are now holding up above support. If they break down further or distribution days (selling in higher volume) stack up - - the budding rally will most likely fail. p$
OK so the "rally" has thus far advanced 22% off the lows (spx). It was "confirmed" on 12-Mar-2009 and in 9 trading days has gained 7.86%. A shift to LONG "swing" futures contracts has been profiting, but we are still tentative given the couple of distribution days we've had since. Today was <i>quite</i> interesting watching an EMD contract gain 15 points, then drop nearly 25 points from there - before closing up 6 points. Also a 35 point jump on Monday banked profits. Still, we are not fully exposed with a Vix still high and the rally uncertain. We got more assurance on that front today as more leading stocks showed muscle. If things remain positive and this turns out to be the rally to kick the bear's butt (or even if it remains a tradable rally) equity could break out. It was nice to see the market recently avoid distribution or days of selling in higher volume and gains today that came in heavy trade into the close. This shows that institutional fund managers are reluctant to sell shares and are putting $$$ to work in stocks. The rally that finally slays the bear isn't a move you ever want to miss. pay$
Stocks took a step back Friday, but finished higher for the third straight week. Volume fell sharply on both exchanges, a sign that professionals didn't rush for the exits. Leadership still scant. On a bright note, few leading stocks got hurt. About 85% of the stocks in the IBD 100 - a proxy of leading stocks - finished lower, but the bulk of them did so in below-average volume. The market performed well last week. Volume fell as prices retreated, and rose as the market climbed. No distribution days were logged. That being said. . .the market's rally eventually will need leaders to outperform.
<B><I>SO FAR</B></I> the market continues to act well. It had run up 24% in a very short time. It had run up 9% during the time we could even allow for a shift from our SHORT "swing" positions to going LONG. Of course we still have scant leadership, but top stocks have been keeping pace and even out-performing in the last week - a stark difference from previous action. Leading stocks held up relatively well with today's pummeling. Volume was again not heavy with the sudden declines, which is healthy market action. The nearly 6% drop in two days basically afforded for me to safely (ier) increase LONG exposure. . .while the verdict is still out as to whether this will allow for gains (a tradable rally) or perhaps a bear market bottom. My exposure in both covered call and futures accounts are about half vested the appropriate margin for account equity. WRT today's market action: "It was like a wild punch that landed without full power." While the market dropped sharply, volume was curiously absent. GM accounted for more than half of the NYSE's increase in volume. <b>The IBD 100, a basket of leading stocks, fell only 1%</b> - a huge divergence from the general market. All things considered, the market suffered more of a stinging jab than a staggering punch. Still, that jab was enough to send every major index except the Nasdaq below its 50-day moving average.
Yesterday's gains were in higher volume than Monday. . .which is again healthy. The late session pullback from the highs didn't feel nice - especially when I had increased my LONGS at the early lows. Overnight I went lighter. . .but as support held in the early going today - I LOVE IT WHEN A PLAN COMES TOGETHER! Look at the volume with the advance today thus far. I was able to increase my exposure and be positioned for this. Furthermore, I added to my covered call exposure in my other accounts and these thus far have NOT been getting stopped (always a good sign as a foretell of an imminent market downturn). <b>Again, look at that volume.</b> Not sure how long this rally can last, but if we can stay above the 50-day moving averages and have further conviction on the part of institutional buyers. . .