Friday, March 24, 2006

Stocks End The Week On A Positive Note, As We Await The FOMC Rate Decision; SP 600 Hits Another All-Time High

The Nasdaq did the exact opposite of what it did the day before, staying on theme. Other indexes continued with there upside, however choppy, bias. All major indexes were up, with the Nasdaq leading the way up .6%, SP 400 and 600 up .5% reaching all-time highs, and the Dow Jones and SP500 finishing up .1%.

The FOMC meeting was the reason the buyers didn't take stocks up more after GOOG being added to the SP and ALA and LU merging, according to the CNBC talking heads. I doubt that was the reason, lol. We have known forever that the hikes were going to 4.75%. This was just a regular day with institutions not doing that much and taking a bit of an early weekend break.

Volume was mixed from the day before, with NYSE volume just a tad higher and the Nasdaq lower. Breadth was positve on both exchanges, with leaders beating losers by a 5-3 margin on the NYSE and a 2-1 margin on the Nasdaq.

The minor gains in the index hid the action that was happening underneath. Silver, Semiconductor, Metals, Steels, Internets, and Heavy Construction sectors showed many strong stocks making good moves in uptrends. This kind of action has been going on the past two days, while the markets dont do much. This is a sign of rotation and if this keeps up should spring the indexes to even more new highs. Especially, when you see broad strength in the Techs, Metals, and Transportation stocks like we had the past week.

However, most people saw this week as nothing but a bunch of random choppiness. With the SP600 going up 10 out of the last 11 days, I am not sure if there is a new definition for the word chop or if traders just get so used to hearing the same thing over and over that we forget to think for ourselves.

Why do I say that? Because all week long I heard how bearish this market is going to be, yet at the same time those pundits were saying that "everyone" is bullish. Really? They are? Well not according to this weeks Investment Intelligence Survery of Advisors. According to that survey--which has a historically good correlation of spotting market bottoms when advisors are too bearish and are not bullish--the amount of advisors bearish is at three year highs at 28% and bullish advisors dropped this week to 43%. This is not bearish; this is bullish. Especially with the SP 600 hitting new all time highs. The last time bears were this high was in March 2003. Do you remember what has happened since then? We have had a three year bull market run that is still going on. And if bulls were at 65% and bears at 15% then I might not have a whole lot of confidence in the words I just typed. But I have my charts, the morons at CNN, the bullish/bearish surverys, and the SP 600 hitting new highs to help me with my convictions. The only thing I could ask for was for the % of bears to be higher than the % of bulls. But that happens only after big long downtrend like the one that ended in October 2002 that then leads to the final March 2003 bottom.

And if you still don't think there is that much bearishness out there go read anything Barry Ritholtz of realmoney.com has written or posted. He can find tons and tons of negative articles but I bet he doesn't post any positive articles because the angry people that make most of these have a negative bias before they start reporting. On that note, I have a feeling, Barry Ritholtz is the next Bill Fleckenstein. If you don't know Bill, he got the crash right. OOPS! Two years before it happened. Do you know how many stocks went on to produce 500% plus gains those next two years? TONS AND TONS. However, if you believed the bearish propoganda Bill was spreading before the indexes actually topped, you missed out on a great great bull market run. You could have just waited till March of 2000 when the distribution days and all the failing charts would have gotten you out. That way you could have locked in those gains THEN have gotten bearish. So it is best to wait for the actual decline to start than trying to look like some intelligent market advisor that knows more than the markets. What ends up happening if you do that and get it as wrong as Bill did and Barry is doing now is that you end up looking like a world class douche bag.

Just some thoughts to consider while you hear all the bearish stories this week of why the market is near a top.

So now we focus on the FOMC meeting. I wonder what is going to happen? Oh, yeah, they are going to raise rates again. Is there really anything surprising here? No. Then I am for sure we will not hear or see anything about it and instead will focus on more current and dynamic issues in the media. However, I don't think I will hold my breath.

New Swing Longs: MANT TWPG UVN CRUS AMRN RBY -- To learn more about these longs go to Investors Paradise and scroll down to Josh Hayes then click on longs.

New Swing Shorts: NONE

Longs Outperforming Market: LPSN SLW-141% ICTG-77% ERS-191% XRTX-65% SIRF-138% TRAD-39% SCHK-36% LCRD-105% BEAV-42% NVDA-73% RAIL-78% RATE-138% BOOM-401% RMBS VIMC-90% PNRG-40% CBG-108% ARS-53% BGC-64% ASVI DECK NMR-36% STMP-48% CYBS MTU NGPS SBAC-46% PETS-160% EAGL-58% UIC-43% ORA-72% SEAB STX CVO-82% SAY-33% KDN VTS CRDN-54% STRL LTM RSTI-31% IVAC SLAB BAM WNR CIB-42% ROK NNDS-32% FFIV-25% CVN RUTH AAU MMK-30% SSW MEK-49% SPWR-42% WGRD TXCO-72% EMKR-155% CPST BTUI-98% SATC FMTI TWTC-122% STXN-80% SFE GNBT-153% CHINA ECIL SIL TMTA TFSM-39% CRXL KGC-30% BWNG-133% ARXX SMSI-37% NYX-25% TTEK JDSU-67% TXI IMMR MXWL DRH BGO-34% OPLK-30% ANX-48% LMIA-75% RNT MGLN TGE COMS PAY-39% RNAI-31% FDRY-29% LMLP

Shorts Outperforming Market: NONE

Stocks On Radar Screen: LAYN SSD PFWD NSTC TXCC WEBM INVX NPSI MIKR

1 comment:

Market Speculator said...

Josh,

I can't agree with you more on your post. Its unbelievable the amount of negativity in this market. But, the only thing we can do is keep plugging. The wall of worry has been built very high. VERY HIGH. This bull market will continue to climb it until its knocked down!

MktSpec