Russell Rebalancing Skews Volume; Stocks Hold On To Thursday's Gains.

Stocks ended Friday's session on a low note and closed down for the day, besides the SP 600. However, in only giving up a small portion of Thursday's gains you have to say that Friday was a very positive day considering what has happened to some of the more recent rallies.

The SP 600 finished up .8%, the Nasdaq closed down .1%, the SP 500 lost .2%, and the Dow Jones Industrial Average lost .3%.

Volume was a lot higher on both exchanges. But the huge trade was basically caused by the rebalancing of the Russell indexes. The tiny losses and the amount of nice charts showing up on my scans for Friday give me the obvious conclusion that this can NOT be called a distribution day. Unlike what one of my readers states, this is in fact not a distribution day.

Another obvious sign things have changed is reading "The Big Picture" in IBD and seeing that the IBD 100 rose 4.2% on Thursday and 1.3% on Friday. This along with the SP 600 performing is a very positive sign coming off of Thursday's follow-through.

One other thing I like to see is that IBD's "Big Picture" states the same thing I have noticed in my charts and analysis of stocks I had to sell that have now rallied back: "When the market fell off its early-May highs, the behavior of stocks in your portfolio should have provided cues on whether to hold or sell. As the downtrend gained steam, falling stocks likely ushered you mostly if not entirely into cash, without requiring you to make many agonizing decisions. A market starting to bounce back works in much the same way. A few strong buy candidates have cropped up, breaking out of bases or from proper secondary buy points. If the rally gains strength, more opportunities will come up. You'll see more quality stocks breaking out and marking bigger gains. Sticking to sound buy rules would allow you to gradually build up your portfolio." I couldn't say it better than that. There are a TON of charts that are building beautiful right sides of their bases. What is funny is that none of these were obvious until after Thursday and Friday. That is how quick things can change. :)

So the bulls are the winners still and now we have a holiday shortened trading day on Monday. These normally have a bullish bias to it. What is the old market saying? "Never short a dull market." I think that might be a safe bet this Monday with such a strong recent ticker tape.

So with that we rap up another quarter of stock trading. Q2 was pretty rough I have to say. I still left positive but I am disappointed I did not make more on the May break to the downside. Who knows, maybe that sets us up for another excellent bullish rally like the one we had off the October 05 lows. If that is the case I probably will quickly forget about the month of June.

Go spend time with the family, cook up some delicious BBQ, and enjoy the fireworks as we celebrate our Independence Day. I shall see you on Wednesday, unless you are hanging out in Investors Paradise. If that is the case, I will see you NOW!

New Swing Longs: KNXA CTS ATML ITG WBMD ALSK IYZ

Adding to Longs: BSML

New Swing Shorts: NONE

Longs Outperforming: OMNI-198 PAY-46 HSR-81 CXW UARM PSPT SEIC GPIC-33 SMSI-102 TSCM-166 CTCI-61 CTXS-53 IHS-50 TRMA DGX DDS BWP BUF BSML BMR PMTR-61 LCC-146 MDF ECOL-39 WMG GISX IDEV Q-76 ALXN FORR FSII KNOL-132 TYL PRVT TIII GMTC

Shorts Outperforming: CRXL SWC BPFH ELY WSM AMAT RTP AVID MEOH VCG IKN APOL BBBY GTRC ITWO

Stocks On Radar Screen: FDS LSTR BOT BWCF LEAP SBAC EDGR HLTH TDS LMNX WRE SWY XPO

Disasters/Get Out: UBFO FLAG AHS RTK FUR. Cut the loss now, redeploy the cash on the upcoming winners. If this rally last there will plenty of them. No need to keep money in these disgusting dogs.