A Nasty Reversal At Noon Hits Stocks On Mixed Volume

A very weak reading by the Philadelphia Fed business activity report showing the first sub-zero reading since April 2003 hit stocks across the board.

By the close the SP 600 led to the downside with a .9% decline, the Nasdaq and Dow Jones Industrial Average fell .7%, and the SP 500 fell .6%. The IBD 100 led with the SP 600 to the downside with a .9% loss.

Volume was higher on the NYSE, giving the SP 500 a distribution day but was lower on the Nasdaq. Breadth came in a negative 10-to-7 on the NYSE and was almost negative by a 2-to-1 margin on the Nasdaq.

Down days on heavier volume are normal for a market in an uptrend. What we have to pay attention to is what happens next. The last time the markets took a hit it was quickly reversed to the upside. If that happens soon, all will be well. If more days of selling come in then warning flags would need to be raised. But for now things seem orderly in this uptrend.

The one negative, ONCE AGAIN, is the fact that the market doesn't appear ready to explode to the upside because leading stocks are not leading yet. The IBD 100 continues to fall more than the averages on down days and rise less than the averages on up days. Until that trend changes I am going to remain a very cautious bull on this market.

Like I just said in the above paragraph, I am bullish on this market but don't think I am a raging bull. There are a lot of good stock charts out there but very few are spectacular. The stocks I have been taking are acting well. Not all of them, of course, but the majority are holding their recent support. In saying that not many are blasting out to big gains. If this market was a raging bull to go 200% long on, you would have more stocks breaking out and immediately blasting off. That still isn't happening. Until it does, I have to remain cautious.

I am having severe Internet problems at home and since I live on Maui it is going to take a while before I am up and running at 100%. Probably by Tuesday I will be at full capacity.

One thing is for sure: It has not been a very smooth transition from vacation mode to work mode with a cold and Internet problems. Oh well! You have to take the good with the bad. Maybe, I will see you at Investors Paradise. That depends on if my cable will let me. :)

New Swing Longs: ICE SMP

Adding To Position: PRFT

Longs Outperforming: PSPT INPH HMSY PRFT MA-38 SYX NGPS PTT CTCI-76 CHINA Q-95 IHS-61 ACGL HCSG HURN DA-37 ABCB CTCM MWRK-26 ORB CXW-29 ROG AVCI BW DKS OMTR FCSE IMA MFA AVNC-69 TP CPAK ICI

Shorts Outperforming: ZRAN-29 NTE-42 EXBD USU CCO CPE-18 NGS-15 SPWR IPS

Stocks On Radar Screen: BONT