Thursday, August 03, 2006

Stock Market Indexes Give More Gains On Higher Volume; Still No Follow-Through Day.

After an ugly gap down to start the day, buyers stepped in and bid stocks higher until the last hour when some selling hit the market. This rally was a bit better than the previous day as techs, leading stocks, and small caps led the way.

The SP 600 led with a 1.1% gain, the Nasdaq was up .6%, the Dow Jones Industrial Average rose .4%, and the SP 500 lagged with a .1% gain.

Volume was a higher on the NYSE and a tad higher on the Nasdaq. The gains on the Nasdaq was the second day in a row of gains on volume below the 50 day volume average. Institutions sure don't look to be in a hurry to buy stocks. Breadth was positive on the NYSE by a 5-to-3 margin and by a 3-to-2 margin on the Nasdaq.

It sure was nice to see buyers step up today after a nasty gap down. This kind of support after early morning selling is a very bullish situation that I can not remember seeing for a very long time. This has to be taken as bullish. This little bit of support on the indexes still should not be taken as a clear sign that all signs are clear and that we are going nowhere but up.

But one sector moving up was the Retail-Clothing/Shoes sector and that group got a lot of discussion today at Investors Paradise. Indeed by the end of the day stocks like CBK GES PLCE and the action in the etf XRT showed promise that this sector is going to join the other defensive sectors in moving higher. However, this sector shows that the consumers are still spending. Rather if that is typical back-to-school sales, or that the consumer still isn't tapped out, I don't know but the charts say good things are in store for some of these stocks.

I only bring this up because this market is still waiting on the Fed and since the consumer doesn't show signs of weakening and inflation still seems to remain a challenge it appears another quarter of a point is baked in. Will that set off a rally on Wall Street? Who knows. But recently all the pre-hype Fed hoopla has not ended well. With some of the overbought levels in the oscillators we may be at an important inflection point for the Nasdaq and the market overall.

There was better action in stocks and the indexes than on Wednesday but I am still not changing my stance that I have stated in this blog during the past week. There still is no follow-through on the indexes, no leaders showing up in leading innovative industries, and no volume in the moves when we do rally on the indexes. We are also still in a downtrend on all intermediate time frames. That right there is a signal to not be 100% long. You want all trends from the short to intermediate to be up. And you also want that trend in all the indexes. It is best for all indexes to be in clear uptrends with the Nasdaq leading. It isn't the most bullish of markets when the Nasdaq can't muster any decent gains and the SP and Dow rally with defensive stocks leading. I repeat it is best to have all indexes moving up with fresh leaders breaking out of sound bases. We still don't have that!

Until we do get that I remain the same. Stay neutral on the market, keep a positive state of mind, and stay extremely patient. This isn't the time to place big bets. Great luck out there and I will see you at Investors Paradise.

New Swing Longs: GES TP CAMT

Speculative Swing Long: ACY (limit only)

New Swing Shorts: NONE

**for more info on longs and shorts, go to Investors Paradise.

Longs Outperforming: Q-92 AKAM-152 IHS-56 BAM-37 VLG-55 TYL-28 DA-30 GPIC-35 CXW DJO IMA BWP RNST JTX SEIC FORR HWAY BRN BOT DGX MO LMT BMRN ALTH GISX IDEV DLP SYKE DDS SMTX RMR

Shorts Outperforming: USU ARO CRXL SWC CXG NTE HCBK WTI RS X STLD VLTR DDE HYDL SYNA RRGB CI KNOT TZIX HSY IART BEC

Completely Cover Shorts: BBBY ITWO OPTN CAT FLR

Stocks On Radar Screen: FILE UBFO TRMB UST DPM VC CRY CHINA MEH APAC

No comments: