Another Day Of Stock Gains On Lower Volume; Pullback Should Be Expected Soon.

For the third session in a row, stocks rose on lower volume. The headlines of the day included the DJIA hitting new all time highs again, the SP 500 hitting highs not seen since February 2001, and the Nasdaq hitting six month highs.

At the close the SP 600 gained 1%, the Nasdaq rallied .3%, the SP 500 rose .25%, and the Dow Jones Industrial Average rose .2%. The best news on today's gains came from the IBD 100. That index managed a 1.2% gain, well outpacing the overall market gains.

Volume, once again, came in lower on both the NYSE and the Nasdaq. Breadth was positive by more than a 2-to-1 margin on both exchanges.

It was a weird day of leadership as the laggards (old leaders) in Metals and Oil & Gas took the top spotlights. The weakest sector today was in Retail. With this kind of backwards leadership you wouldn't think the IBD 100 and leading stocks would have done well; but they did.

The one thing I am sick of already is all the talk about Dow 12k. It is BS and meaningless to the overall game of making money in stocks. Too much attention has been put on this irrelevant number and now that all this attention has been placed on it I am sure this number will be worthless to most traders.

The important thing to watch isn't some silly arbitrary number. The most important way to follow the markets is by watching the action in leading stocks and counting the number of distribution days we see during the rally. This will give you the ultimate tell to how much strength this rally has. A random number is meaningless. The action of the market is what is important. Nobody knows when the market will stop going up or what number it might hit. It is all guess work and a waste of time to investors who need to make money NOW.

After reading Helene's column and seeing the Market Vane bull numbers (70%), it is becoming quite obvious that a pullback should be expected soon as now a lot of traders have realized this is a rally and are now probably late to the party. This uptrend is simply getting too obvious after one of the best quarters for stocks in three years and another month of gains.

It is earnings season and you know what that means. It is time to be careful and watch out for nasty surprises. It is very volatile out there and if you are long a stock before earnings make sure you pay close attention to it. Regulation FD has made the investment battlefield for chartist much harder during earnings season as info that was leaked out and appeared on the charts no longer appear until that big 20% swoon hits you.

With earnings season here I expect some wild action in the indexes. Remember, one more time, if your stocks has earnings coming up and you just bought it...watch it closely. Nobody likes to take unnecessary losses, especially if you did not buy right and you chased the stock. Those losses always hurt because not only did you buy wrong and break rules but then the reality hits you that you did wrong.

So be careful out there. I will see you at Investors Paradise.

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New Swing Shorts: NONE

Longs Making Gains (low vol non-IBD excluded): CVO-131 SYKE-47 CPAK-36 INPH-58 IHS-80 TYL-48 INWK-30 DA-37 CXW-36 IIVI-27 CTCM-30 SEIC-25 MA-42 RMTR-34 OPEN BITS JST SIMG ROG HCSG LWAY RICK RSTI LINTA FTEK BEAS PERY SMSC APLX LTM BEBE EVR HRZ TDY KBAY ORB CAB PRFT CPA DIOD DKS BMC ISYS FORR NITE SIMO IDXX CGX PSPT AHS AYE UAHC WEBX FBNW DJO BOT ???? ACGL PT NSTC INAP OMTR CLVT TRAK OLAB PDSN ALTH APN AIQ IDEV REGN TIBX PNW NU MOS MNKD NXL SCI SMP STZ BMR ASML NHP IONA SUAI

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