Major Stock Market Averages Give Investors A Valentine Day Treat

Stocks market indexes rose across the board today, with the Dow Jones Industrial Average taking the lead. I can not remember the last time I said that! Wow.

Anyways, the Dow was up 1.2%, SP 600 up 1.2%, SP 500 up 1%, and the Nasdaq up 1%. Volume rose across the board on all the indexes.

The Nasdaq's increase in volume still was not enough to put it over the 50 day volume average. The SP 500, however, was higher by about 30% and the volume did come in over its 50 day volume average. The SP 500 also reclaimed its 50 day moving average.

The SP strength and positives today can only be triumped by one other index -- The Dow Jones. The Dow Jones followed through today to confirming its recent rally attempt. The advance was a pretty big advance and that is coming off a period where an obvious rotation from small caps to big caps was happening.

This follow through, indeed, does reset all the prior distribution days. I have covered the shorts I put on and now am operating from a long bias solely again. However, not all follow through days lead to a rally. So just going out and buying random stocks is a very silly move here.

This follow through on the Dow comes from a market that was very favorable to small and mid cap stocks from the October 2002 lows. This "obvious" rotation into big caps is very good for the last leg of the bull market.

When big caps take over the leadership from the tech, small, and mid cap arena you can normally place the bets on a market being in its last stage of a major advance. Since I can not predict the future, I will say that I am not sure if this is in fact what is happening. But I can tell you that we are near the end of the Fed tightening cycle. And since markets rise when rates are being tightened and fall when they are being cut, it is a good possibility that we are in our last year of a three year bull market.

But like I said before not all follow throughs work and this follow through is lacking quality charts. Normally on follow through days for the major indexes, you will see a lot of charts nearing completion of very good bases and you get some early breakouts before and during the follow through day. However, this follow through is ugly. I see no quality leaders setting up in first or second stage bases and the few longs I am even daring to take are not of the prettiest chart patterns either.

If this follow through day is for real, the market will start to provide us with stocks completing sound bases with excellent price and volume patterns. If these do not show up, I think it will be safe to say this rally will fizzle out. Normally, you need fresh new leaders to lead real rallies. When the old dogs like T, CAT, CSCO, and MSFT start to get play you know you are near the end -- not the beginning. At the same time, though, when the big financials like MER and others are hitting new highs you normally can bank the markets aren't heading for new lows.

Are you confused? You are. Me too!

Great luck out there!

Happy Valentines Day!

New Swing Longs: KDN TBIO TBH

New Swing Shorts: NONE

Longs Outperforming Market: ATHR-74% LCC-60% BOOM-306% CRDN-55% RAIL-61% SCHK MFLX-155% WIRE-109% STMP-27% MDCC-32% PRPX CNTF LTM GES-80% CBG-79% KEYS-32% BBD-132% CLZR-27% KEX COGO CIB-30% GOL-64% MSCC-63% NGPS VSEC-38% LDSH-58% OXPS-72% AXE-26% CKCM TRO SAY-25% STX NVDA-47% KNXA-26% IHS-28% ORA-82% IKAN-31% FWLT-61% MORN MMK PEC UEPS WBMD BEAV-35% ARS-33% RUSHA TGB-25% HGRD BGO VRTX-166% MERX KGC-28% STXN-50% NXG-44% ZEUS-44% MU BGC-48% NOVL-26% SVR-67% MEL EDS CHE Q-30% HSP-29% NRPH-89% EVST-26% SIRF-125% TXI STD CVO-62% PPCO-26% RATE-118% CMPX ADLR-60% TWTC-76% UHAL-85% FNX APAC HEIA SILC-105%

Shorts Outperforming Market: NONE

Stocks On Radar Screen: BWLD CRXX NWD AXTI TRBM IRM CPSS AVM