A big drop in crude oil prices (2.6%) helped stocks rally and mark gains across the board. Some last hour selling knocked stocks off their highs but today's action was bullish.
For the day the Nasdaq rose 1%, the SP 600 rose .9%, the Dow Jones Industrial Average gained .6%, and the SP 500 tacked on .5%.
Volume was higher than Friday's levels, marking bullish action by the indexes (rising on higher volume). However, volume was still well below the 50 day volume average. That is day 12 in a row for the NYSE and day 7 for the Nasdaq. Breadth was positive on the NYSE by a 2-to-1 margin and by a 5-to-3 margin on the Nasdaq.
It was very nice to see stocks rally today with oil stocks taking a nice hit. With the market rising with oil stocks falling it is very well possible that this downtrend is setting up a sector rotation. Tech stocks did very well today and some of the industry groups in the bottom did the best today while the top groups in oil didn't do so hot. If we can get some nice charts setting up in stocks that have solid fundamentals then maybe the market can get its legs and make a real run for a long lasting bull phase.
Right now, we don't have that. The current bad news is the IBD 100. As I keep saying in real strong bull markets this index leads to the upside and lags to the downside. It has been doing the exact opposite this entire rally. Today was no exception, with the IBD 100 only up .7%. That lagged the Nasdaq and SP 600. This is not bullish action for this rally to hold up and become a great bull market. Until the IBD 100 has new leadership this rally is still to be taken with caution.
Saying all of this, I am still finding plenty of wonderful, beautiful charts in stocks with very good fundamentals. These stocks are holding up well and are now making gains a bit more consistently.
What does all of this mean? Just what it says. Take small longs but keep them on a tight leash, if you must trade. The trend is up, still, for now.
The bigger trend is still quite unclear. We need more volume to come into the market before anyone starts making any serious guesses on where the market is going next. I don't like low volume rallies because they can lead to heavy volume selloffs. With all the pretty charts this time I am hoping that isn't the case. But hope doesn't make anybody any money.
Until the trend changes I will still go long small to medium size positions in stocks with solid fundamentals breaking out of beautiful charts.
Never short a dull market! Great luck out there and I will see you at Investors Paradise.
New Swing Longs: IMKTA INWK HGIC LMNX NU TRAC
Adding To Holdings: TZOO ABCB PT
New Swing Shorts: NONE
Longs Outperforming (low vol non-IBD excluded): CVO-137 PMTR-74 TYL-38 GXW-25 VLG-52 IHS-46 AVNC-28 DA-33 ALY TZOO HMSY CHINA ABCB RNST NITE PSPT TRMB TRMA AHS GES NEU CTCM IDXX HSR WEBX PT HWAY IMA BMR SEIC ISYS LMT EGN DGX MIR JTX EMS BRR MA GISX BMRN SVNT MFA RMR
Shorts Outperforming (all): SWC-39 JOYG-36 BTH-15 RS-15 RES PDCO HCBK WTI X STLD HYDL KNOT HSY SIGI ATPG NC GSF KG CPE NGS
Stocks On Radar Screen: NCTY LAYN DRYS DLA VSEA BEBE CACB SMOD CLUB LBIX SWHC MOLX RTK IIVI GHDX LYG MVSN ITC APLX
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