Ugly Afternoon Reversal Slams Indexes With A Distribution Day; More Flop And Chop

The stock market suffered a nasty intraday reversal, across the board. The Nasdaq fell .9%, SP 400 fell .9%, SP 600 was down .8%, NYSE down .7%, the SP 500 down .6%, and the Dow Jones down .4%. The markets were rallying on good volume early then just dumped all the way to the closing bell. A bad day for the markets, without a doubt.

Volume picked up by quite a lot, on all exchanges. The higher volume is a distribution day on all indexes and that gives the Nasdaq four distribution days in four weeks. That to go along with what might be churning action should be enough reason for new traders to keep their powder dry. Breadth was also quite negative for the day with decliners beating advancers by 8 to 3 on the NYSE and 2 to 1 on the Nasdaq. Breadth was, in fact, negative all day long, even as the indexes were higher earlier in the day. That foretold of the coming intraday swoon.

Leaders did not escape the smack either. The IBD 100 fell 1.2% and some stocks took decent hits. However, I did not have ONE stock in my large portfolio take a plunge or crash. So despite the ugly action on the exterior, my portfolio doesn't show an obscene amount of damage. So despite the weak market, most stocks just did not get the smackdown that most traders would have thought they would have today. That can only be taken as a bullish sign.

It is still hard to tell if the Nasdaq is churning or rotating into real new leaders. There is no clear evidence to make a solid judgment yet. Only time will tell. But the pessimism is thick and that along with a lot of my stocks looking good still shows evidence that it is rotation. However, on the index alone it definitely looks like churning. Conflicting signals indeed. Funny thing though, while we focus on the Nasdaq and Semiconductor stocks, the NYSE is still in a very obvious uptrend. I don't see how that is bearish. Even though commentators are calling this "near the end for the indexes." I don't think it is wise to write off an index that is still in a sub-intermediate term uptrend.

What I have given you above are the facts. What the media gave you today was the excuse that the markets fell because we now think Bernanke and the crew will raise rates at least two more times, the yield curve inverted, bond yields rose, and the market is overbought. All of it is not true. The fact is there were more sellers than buyers. That is it. Doesn't make a good news story but it is the TRUTH.

Now I get to play the media. Is the market about to crash? Is the "sure to happen" civil war in Iraq going to cause the economy to go into a recession? NO. Today's action is what has been typical all year long. Flop and chop with an upside bias. Nothing more, nothing less.

This was a negative day, but stay positive and keep your head up. The sun will come out tomorrow as sure as there is always a bull market after a bear market. History never changes in the stock market.

Aloha!

New Swing Longs: WNR SIL INB

New Swing Shorts: NONE

Longs Outperforming Market: BOT RMBS NVDA-69% KNXA-54% KEX-29% STRL TMI LCRD-92% WIRE-119% BWLD MFLX-230% BGC-58% AKAM-82% CRDN-52% UIC-37% DECK PEC SLAB CVN SPWR-44% GNBT-187% BFT MSPD-30% SFE RADN TYL STXN-67% STKL IIP-33% ISV-28% TXCO-43% WGRD OPLK SYKE CNXT-43% ANX-43% PWR WST BEAS BEAV-40% ECOL GEMS TVIA AMKR ICTG-96% LTRX-28%

Shorts Outperforming Market: NONE

Stocks On Radar Screen: CNH CACS XING HEB AUDC DIL MVC

Sidenote: When I set up a free and pay for structure for the blog I will have a new web site. Mind you this is still a while away. It is all free for now STILL. I have registered bigwavetrading.com, .org, and .net.

So now we have a name. Next is finding a good web designer!

I will be back soon!