It was a great day, overall, if you are a bull, as stocks put in their best performance in over a month. The leader on the upside today was the SP 600 with a 1.7% gain, followed by the Nasdaq's 1.3% gain, the SP 500's 1.1% gain, and the Dow Jones Industrial Average .84% rally.
However, sadly, for the bulls, volume came in much lighter than the day before. You want to see the opposite of that. You would normally like to see higher gains on much higher volume. That would give us a reason to start to expect a good rally from here. Unfortunately, to me, it felt like a dead cat bounce. And all these bounces are HUGE. As IBD noted, since 1990 the 10 biggest price percentage gains on Nasdaq came in the 2000-2002 bear market. That is not an opinion. This is the simple facts. The only kind of facts.
Now, with all that information, we must now look at where we stand. We are in day two of an attempted rally that shows signs that it will not last. What we need to see now is a gain of 1% or more on higher volume within the next 10 days preferably. But like I said before with Food & Beverage, Leisure, Medical, and Hospital stocks becoming the next leaders this will not be a bull market like the one that was launched in March 2003 or even the one we saw in October 2005. You need real leaders in new and exciting industries. We don't have that and with the way the charts look it will be a while before we do.
We are still oversold and can still rally, of course. But with that overhead resistance and downtrending moving averages in most indexes, I doubt we will get anything but an oversold bounce.
Stay disciplined, keep new buys small, don't chase shorts that are in no-mans land, and for God's sake do something fun this weekend!!!! I shall see you on Saturday with Tuesday's commentary.
Have a great Memorial Day weekend!!
New Swing Longs: PCLN HWAY GIS
New Swing Shorts: ASO RF
Longs Outperforming Market: AKAM-102 JOBS-27 STRL-62 CBG-103 BGC-79 BAM-30 WIRE-162 GIGM-187 AOB TZOO KEX-46 IVAC LMIA-107 SBIT TFR-99 AXE-33 ASGN-83 IHS-33 RATE-150 COGO-73 WEBX EAGL-64 PKE RAIL-52 ATHR-75 CTXS-50 MORN SHFL CXW TGE DSGX-55 CTCI SMSI-70 PSPT CVO-112 ECLG-75 SMDI-146 SYKE Q CBIZ HNZ
Shorts Outperforming Market: JOYG BUCY AMH WSM AMAT
Stocks On Radar Screen: KAI NTSC LTS
Why I Hate Shorting: SGY--16% punch in the face.
3 comments:
" Food & Beverage, Leisure, Medical, and Hospital stocks becoming the next leaders "
how do you already know that those will be the next leaders?
are you still riding the short in JOYG,,,,
they took quite a hit yesterday, but bounced back....i covered half of my position in JOYG
enjoy your posts
Yes I am still short JOYG. Covered a little on that drop yesterday still have some.
How do i know they are the next leaders. Go to the IBD industry group list and look at the ones moving up the list the most since the downtrend started. That simple. The other thing all the charts with pretty patterns or are breaking out in my scans are from these sectors.
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