Wednesday, March 15, 2006

Strong Rally On Higher Volume Confirms Yesterday's Move; Leading Stocks Help Lead The Market Higher.

Just as you thought the market was going to continue its chop and flop it instead continues to rally. For the second day in a row major market indexes came under good accumulation from institutional investors. However, the media will have told you that the Fed's beige book report was the reason for the upside move. Believe what you want.

Major market indexes all closed near the HODs, with the Russell 2k up .9%, SP 600 up .8%, Nasdaq up .7%, SP 400 up .7%, DJ up .5%, and the SP 500 up .4%. The Russell 2k and the SP 600 made all time highs today and the SP 500 and Dow Jones almost made new 5 year highs.

Volume was higher on both the NYSE and the Nasdaq. Obviously, this is what you want to see as markets rally. Breadth was 2-1 positive on the NYSE and 3-2 positive on the Nasdaq. Overall, a very nice day. Not the best but a lot better than the choppy action we have seen the past two weeks.

The leading sectors today resided in the Transportation-Railroad and Airlines, Retail-Department Stores and Restaurants, and Building-Supplies and Materials. Along with those good sectors, leading stocks led the rally with the IBD 100 rising 1.7%. The constant mix of new leaders leading sectors, and the IBD 100 full of leading stocks making good gains the past two days are very bullish for stocks.

The most incredible thing about this rally is the fact that bears are at their highest levels since April 2003 and bulls are at their lowest level since August 2004 according to the Institutional Investor survey of newsletter writers. Bearishness this thick is exactly what you want to see when a market starts a new rally. Markets rise best when they have a big wall of worry to climb. This market is full of worries. I just read an IBD article saying that even though there was 2.5 million new jobs added last year and unemployment is lower than 5% over half of the stories, on ABC, NBC, and CBS, covering jobs was NEGATIVE! Surprise!!!!

The last time bears were this high was in April, as I have said before. What did the stock market do from March/April 2003 - January 2004?

Now will this be the same rally as the March rally was? I don't know. The underlying technicals on the indexes are weakening and this could just be an oversold bounce (based on McClellan oscillator). However, earnings season is over and this could be the moment that stocks go on a run like 2003. Either way, it does not matter. Just follow the charts and react accordingly.

As you know if you have been reading my blog, I am one commentator that did not capitulate during the recent market downtrend. I stayed somewhat bullish with a cautious bias. That was the proper play, since both the long-term and intermediate trends were ALL up on ALL indexes. How can you get so darn bearish when the intermediate trend is still up? It just didn't make sense.

But the media has brainwashed everyone into believing the market sucks, the economy sucks, the President sucks, Iraq sucks, Afghanistan sucks, Iran sucks, and everything in life just plain sucks. You want to know what? CNN, CBS, ABC, NBC, and PBS, YOU GUYS HAVE LOST ALL CREDIBILITY. They do not report all of the news. You are getting selected stories that fit their anti-Bush agenda. It is getting to the point of absurdity.

If you want facts, you better go somewhere else. The BS that comes out of these once decent news sources is just totally disgusting. Yeah, they may be right two years from now but that hasn't helped you make money the past three years in one of the GREATEST economies recorded in US history.

If you just follow the charts, watch the indexes, and stop trying to predict the future you will become a better disciplined investor.

And if you turn off the TV, you might find that life is great and we live in the greatest country on Earth. No where else do you have the freedom and opportunity that exist in this country.

I hope you enjoyed that, if you are a bear. I will join your camp when the time is right. Right now, you guys are wrong AGAIN. Three years and counting...

Great luck and I shall see you tomorrow!


New Swing Longs: NTES RIMM PWR ECIL VSAT CKR LPTH MDII--Go to Investors Paradise to read about these longs. Scroll down to Josh Hayes, click on longs, and read the most recent post.

New Swing Shorts: NONE

Longs Outperforming Market: VIMC-63% RAIL-65% COGO KEX-26% IHS-26% MFLX-209% SCHK-39% CYBS SLW-104% BAM STMP-47% CBG-103% CRDN-54% ERS-137% PETS-155% IVAC ARS-50% STX XRTX-31% UIC-34% BBD-144% CTXS-33% SAY-29% CHE NNDS-27% RUSHA BOOM-373% CIB-40% NVDA-67% TMI KDN NGPS LTM CLZR-36% LCRD-93% PKE NTAP WIRE-148% MDCC-39% RUTH FFIV ROK VLG HEIA-31% FRGB MMK-41% SPWR-51% FWLT-65% ALTU PEC SSW WBMD SURG LMIA-90% EMKR-142% SWW JDSU-67% TOMO NVAX-54% RBAK-168% FDRY-28% GNA VRTX-195% ECOL LRCX-34% GEMS ECLP NYX-43% NDAQ-321% GNBT-69% OPLK ISV LCC-71% SYKE KLIC-29% ACTG-28% IIP IT TXI EAGL-51% AXE IED-85% STKL SNPS A Q-49% KNOL-45% VLTR BE BEAS BWNG-96% STTS TBH MT HOM ELMG IMMR TFR-59% SF VTRU

Shorts Outperforming Market: NONE

Stocks On Radar Screen: PENN CMG CHNR CTDC IBIS TXCC FRD

12 comments:

yellowpearl said...

Hey dude, (grin), just wanted to thank ya for bothering to post on the RM blog. How many screens do you use? Since ur out a lot of the day I was wondering if you need as many. Yesterday I found I was quite limited in the ramp and could have paid for any improvements I made if I'd had more screens. Gonna have to bite the bullet sometime and get the back-up system and more screens.....NVAX in the news this a.m.with more gov't funding.

Y.Y. said...

i didnt capitulate as well even though my clients were calling me nonstop telling me how the market just sucks and to sell everything and how i am just stupid bullish told them to turn off cnbc because the market was just drifting lower i am though selling into strength now as i believe a high will be found shortly at least for short term s&p around 1330

Joshua_NControl said...

Hi, Yellowpearl. If you read my weekend post on how I use IBD, I have a link to "how I scan for my stocks" on there.

I use one master IBD screen and two scans I have come up with on my own.

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Y.Y., yes. The reason I felt compeled to post that was I just had two conversations with two part time investors and every talking point they could think of sounded like a repeat of the nightly news scary stories.

It is amazing how these people are willing to believe anything they hear on TV before actually researching the numbers behind the story.

Bottom line, both of these folks who are just now starting to think about investing again--they are only three years late--are now once again sure that the market is now in big trouble especially if Iraq breaks out into Civil War.

Living on an island where a lot of people are oblivious to reality, I can get a really good guage of how the average Joe thinks. And I am telling you right now, they don't think the economy is doing well at all. Why do they think that? They get there news from two sources: CNN and the Maui News. LOL.

Great job, Y.Y., on doing a great job at being a disciplined investor.

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Y.Y. said...

stxs finaly broke out nice volume already i hope for a strong close and we shoot for the 52 week high by tommorow or monday

Anonymous said...

josh, when you put in your next day long orders do you normally put the limits in the for the open at the prior day close price(which was the breakout day) or lower

Joshua_NControl said...

Yes, I put the limit at the prior days close. I also put a straight up market order for almost all stocks that have trade over 100k avgerage and is not an IPO. IPO's all get small market orders and larger limit orders. Stocks like CVN only get limit orders.

SO 95% of time I will place a market order. 100% of time I will place a limit order.

Joshua_NControl said...

OOPS. I just read what I posted. I did not complete that.

It should say also...unless the stock is too extended from pivot point. In that case, I put a market order and a limit order at the pivot point. Good example is ECIL today. The pivot point is 9.25 plus .10.

Y.Y. said...

hey what you think of SVI on the next consolidation
explosion in volume

yellowpearl said...

Josh I bot some MDII, that looks kinda interesting. I have just been amazed at the strength of NVAX and XSNX. I own both luckily. I've been in NVAX twice now, rebuying it on 3-3-06 after selling earlier for a nice profit.Well I thought it was nice, till this second run, I've sold a fith of it up here and gonna let the rest ride. XSNX is a silmilar story , bot it on 3-3 also , my lucky day, and it has run nicely. I sold a 1/16 today at 2.91, just hated to ,but dang can't be too greedy.But anyway some awesome solar play. I own some I bot back before xmas with cost basis of .55 I'm holding for the long term in another account. Hope you don't mind us posting some our goodies here. hey you got any opinion's on CPST? I'm long that also.

Joshua_NControl said...

This is an open forum. All topics are fair game. Heck, you can even heckle me. I don't mind.

CPST has just recently shaken me out of my long position with an 8% cut loss. I still like it and it definitely is basing. I just want to see it clear this years resistance before buying. I don't want to get shaken out again.

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SVI would be a nice long if it bases for a long time. Right now too much speculative action. It might not hold these lofty levels.

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yellowpearl said...

MDII did well today. Still holding. I almost bot VSAT also the other day.Whew!! The chart looked pretty good till yesterday after the open. Last time I looked still no news to explain, Curious if you've heard anything? Hey on a different topic when I was talking about screens in another entry I was referring to the computer screens (hardware) that ya use your eyeballs to look at. LOL LUCK!!!

Joshua_NControl said...

Oh, LOL!

I use a Dell laptop with a 15" screen

and for right now just a Dell desktop with two 19" flat monitors.

My perfect setup, in the most efficient way, would include six to eight monitors and two computers with one laptop.