Monday, February 27, 2006

Markets Rally, On Higher Volume; Wall Of Worry Proves Easy To Climb For Stocks.

Stocks rallied across the board, again, with the Nasdaq 100 leading. The Nasdaq 100 was up 1.1%, Nasdaq was up .9%, SP 500 up .4%, Dow up .3%, SP 600 up .3%, and the SP 400 up .2%. Volume came in higher, marking another accumulation day, but it was still below the 50 day volume average. So there was not a lot of oomph in the move higher.

The low volume appears to be caused by a lack of sellers instead of a lack of buyers. I see this by looking at how easy it is for the markets to rally higher. The market is getting blasted by negative headlines everywhere yet keeps marching along. That is very bullish and is throwing a monkey wrench into the perma bears thesis of how and why this market should have crashed by now.

There are plenty of bears out there by looking at how much the bulls came down and bears rose in the most recent Investors Intelligence survey. That along with the increase in cash position of mutual funds shows there is plenty of money on the sidelines these investors will have to deploy once they either realize they are wrong or feel the pressure from lagging their peers performance.

The wall of worry is setup for the markets to climb to more new highs. The SP 600, SP 400, and NYSE are at all time highs, yet the past three years have been dominated by bad economic news. This economy gets no love except from those smart enough to block out that bad information.

We shall see what the rest of the week brings.

All trends are up. No more sideways or downtrends on any time frames for the Dow, SP 400, 500, 600 and the Nasdaq.

New Swing Longs: HOM AP AGT

New Swing Shorts: NONE

Longs Outperforming Market: MFLX-180% CLZR-45% BNT-45% GOL-81% NVDA-58% ATHR-70% STMP-37% RVSN-37% MTU ERS-134% NTAP SCHK ASF-182% SAY-31% TRAD-63% FFIV LSI ECLP BBD-153% CBG-91% STX MORN PETS-153% MSCC-71% RAIL-74% KEX CHE ASVI-28% XRTX-32% TMI KEYS-37% MEK-30% LTM SIRF-132% SPWR-55% MMK SEED KNXA-36% ALTU PEC DRH RNAI-28% NVAX-26% ALKS-35% REGN-56% DMX-26% SMSI GNBT-68% BCRX-162% AX SPNC-71% NSTK-40% FLML CTXS CLG-60% PPCO-30% VTSS HOMS-31% BEAS MNST-43% PEIX ARXX DEPO MNG-96% STKL RADS VRTX-232% A KDN BGC-56% LWSN ING RUSHA DECK KNOL-27% BAM STD RSTI-32% ENMC SILC-125% ICTG-64% ZVXI BLD-27% HEIA-27% APAC-25% AUXL AMPL

Shorts Outperforming Market: NONE

Stocks On Radar Screen: GNTA HA STTS PPHM AVII MAGS

8 comments:

Troy Peterson said...

Hey, had a question on your trading style. You posted a list of picks on Feb 2nd 2006, of stocks to buy on a breakout. Specifically, you said that any of the trades should be closed if there was a close below the low of the breakout day. Looking through all of those trades, even the ones that went up 33% (eventually) broke down and would have been sold at a loss following this trade methodology....

was curious on whether you thought this was an anomaly, just a rough trading patch, or something else. Several of the stocks did rally and go higher, but would have been sold out at a loss beforehand.... was wondering if you adjust your methodology in this instance?

TP

Joshua_NControl said...

That was for newbies. I give discretion. If you are new at trading you can not average out like I do. You will not know and understand if the close was done on low volume or if the pattern is still sound overall.

Give me the list of stocks you are refering to and I can explain. But most stocks that breakout if they pullback on lower volume and yet the larger pattern is still in tact maybe i will sell 25%, 50%, or 75%. I have to make that decision based on the millions of charts I have seen in my trading lifetime.

Most stocks though dont breakdown right after I buy. The ones that do breakdown are completely sold. The others that just pullback on lower volume will be held in extremely strong bull markets as the one we are still in.

Anonymous said...

Joshua, I have been reading your blog and REALLY appreciate that you take the time to post your activities. What do you think of CKCM ?

Market Speculator said...

CKCM is flirting with its 50dma. However, its fundamental picture looks nice. This is a watch and see stock for a bit...look to see how it reacts around its 50dma.

I like it...

Market Speculator said...

amazing, as of 11:17 EST there are 214 new highs, and 67 new lows....and the market is getting hammered, very interesting!

Anonymous said...

Where do you think the buy point on TSTA?

Thanks

Anonymous said...

Do you think with the state of the markets to be on margin or are too late in the game for that?

Joshua_NControl said...

CKCM: market speculator said EXACTLY what I would have said.

TSTA: is that an otcbb or a pink sheet stock? I dont touch those or even look at them.
.......................................

If you are a newbie you shouldnt be using margin at all. If you are good at trading stocks you should use margin; I am always on margin. I get off margin once the market starts selling off.

We are not there yet. The market has had one bad down day yet everyone thinks this is the start of something big to the dowside.

Climb that market wall of worry, climb. If we do selloff that is fine. But for NOW it is only the liberals and the bears who think the market is going down. They are still wrong! Just like they have been the past three years.

As for long term picture outlook-we are near the top of the rate hike cycle. Stocks go up when rates are rising and fall when they are being cut. Time will tell.