Stocks finally took a rest, after four days of price gains. The blame on the poor action came from a weaker than expected consumer spending report and a high personal consumption expenditure index. Personally, I think the bulls, decided to take an early weekend after four days of kicking the bears ass.
At the close the SP 600 led the way to the downside with a 1% loss, the Nasdaq followed with a .5% haircut, and that was followed by the SP 500 and the Dow Jones Industrial Average losing .3% each.
Volume was about even on the Nasdaq or 1% lower, depending on where you get your data from. Volume on the NYSE was 1% lower. There was no distribution day on either index. Breadth was negative by a 10-to-7 margin on the NYSE and negative by a 3-to-2 margin on the Nasdaq.
For the week, stocks rose across the board. The Nasdaq was the leader with a 1.8% gain, the Sp 500 gained 1.6%, the Dow Jones Industrial Average gained 1.5%, and the SP 600 lagged with a .7% gain.
For the month of September, the Nasdaq led with a 3.4% gain, the Dow Jones Industrial Average and the SP 500 rallied 1.6% and 1.5% respectively, and the SP 600 lagged with a .8% gain.
For the quarter, it was the best quarter for stocks since Q4 of 2004. The leading index during this quarter was the SP 500 with a 5.2% gain. The Nasdaq rose 4% this quarter. These are simply wonderful numbers. The facts prove that the bears opinions did not matter the past three months. Opinions RARELY do.
The theme that has come to life very obviously, to me, is the fact that this rally is being led by big-cap, value, and some speculative stocks. This rally is not the strongest of rallies, since the growth stocks and leading IBD stocks are not leading the rally. But, we have a rally none-the-less. The fact remains there are plenty of stocks breaking out and making gains in the big-cap, value, and speculative names. Even defensive names like Beverages and Medical are having stocks breakout and rally.
It is obvious, to me, that if you are looking for growth stocks to be leading you are looking at the wrong place. This is a rally for the value guys. The growth stocks may jump in later on and the IBD 100 and SP 600 could retake leadership. But until that happens, ignoring the big-caps and speculative issues racing to higher highs just so you can wait for the perfect market doesn’t make sense.
With all the charts I keep posting everyday, there should be something in there that jumps out at your face as a “oh my God, that chart is so pretty and its breakout is so clean” that you should be able to produce gains in this market. Sitting in the sidelines in all cash is not a smart play when the markets are rallying like they are. This doesn’t mean you should be 200% on margin either. Trust me, I am not. This is not a growth rally. This is a value rally. The best of the best chart patterns in the best of the best names in the HOT technology industries are not the stocks moving in this rally. Therefore, the rally probably doesn’t have the legs to be a multi-year cycle. But that doesn’t mean you should miss out on all the great charts that are breaking out from pretty bases that evidently no other market player can see but me.
So, remember, for now it is about value; not growth!
If you are not doing well, it is no big deal. If this rally keeps going growth stocks are going to join. If you haven’t been disciplined and objective taking breakouts, I know this rally can be painful to watch it go without you. That is why you must always trade the chart and not your opinions. All the bearish arguments have PROVEN to be FOOLISH FOR NOW. Later on they may be right. But what if some stocks have 100-300% runs before they are right? I don’t want to chance missing out on that. However, if this thing is the real deal there will be plenty more charts to trade from proper breakouts from sound base patterns.
Monday is Yom Kippur and is bound to be quiet. In saying that don’t ever short a dull market and if the market sells off check the volume to see how intense market players are. I am sure it will be a quiet one.
If you have any more questions, I would recommend reading all of my post since I returned from my vacation around 9/21. Everything and everything should be discussed there. And if you are not reading my “general market observations” post at Investors Paradise, you are doing yourself a major disservice as I post random thoughts over there all the time. Thoughts I don’t post here. For instance, why am I bullish now? Could it be because of the IPO market? I haven’t talked about that a lot here. Maybe I have at IP?
Have a great weekend and I will see you at Investors Paradise. Aloha!!!!
New Swing Longs: RICK AVCA QI HDIX APRO PDSN BDX HB SOFO AXTI
Adding To Existing Positions: ISIG ICE
New Swing Shorts: NONE
Longs Outperforming (non-IBD low vol excluded): OMRI-36 SYKE-40 CXW-28 STEC-38 TYL-36 DA-36 MA-40 CLEC-25 CTCM ICE SYX BWP XING HRZ RSTI BITS SIMG CPA ISE PSPT HMSY TIBX PRFT ACGL LMT IDXX BMR DUCK CVLT KAD OMTR ISIG AOB NFLD BRLC CCOI MFA WEN CYBS RMTR GENT ELOY
Shorts Outperforming: CPE-17 HYDL-17 USU KMP IXC ARLP ASA SM IPS TDW ATPG
Completely Cover Short: GSF
Stocks On Radar Screen: NIHD NWS LEH MAIL MR NGA GHDX
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