Market Suffers A Severe Selloff...NOT!; What Were The Bears Thinking?

Stocks ended the three day rally, as weaker than expected job growth and a selloff in GM helped contribute to the slight selloff. That is what CNBC told me. I, truthfully, just think it was time for a rest and traders simply took a break from buying equities.

By the closing bell, the SP 600 fell .5%, the SP 500 fell .3%, the Nasdaq fell .3%, and the Dow Jones Industrial Average fell .1%. The IBD 100 fell .4%. The good news about that is the fact that it didn't lead to the downside after leading the past two days to the upside over all the indexes. That is what I like to see, for a market that is rallying. The one sore spot was the Semi index down .9%.

Volume was lower on both exchanges which is very positive after two days of solid gains on above average volume. Breadth was negative on the NYSE by a 2-to-1 margin and negative on the Nasdaq by an 8-to-7 margin.

For the week the Nasdaq gained 1.8%, the SP 600 and Dow Jones Industrial Average gained 1.5%, and the SP 500 gained 1%. And the best news was that the IBD 100 lead all of them with a 1.9% gain. After such a strong previous quarter, stocks sure have not stepped where they left off. The other positive from the rally was the fact that NYMEX Crude fell 5% and Dec. Gold fell 5%.

This selloff in the metals could be what is fueling this rotation into better quality stocks in more growth and value oriented businesses. Hence the Dow Jones and the SP 600 making good gains the past week.

Today's pullback was nothing compared to all the gains we have seen the past quarter and the past week. The lower volume shows that the big boys are not bidding stocks up to dump YET but are buying stocks and letting the market pullback.

As I have mentioned here and at Investors Paradise at least 50x the small caps, tech , and leading stocks are showing leadership that the big caps had when the rally started. After four weeks of hearing this argument, like I have said earlier, this should now be put to rest with most critics of this rally.

Retesting the breakout areas of the Dow Jones Industrial Average would not be a surprise here and would be quite a welcome as that would setup a lot more stocks that I see having the potential to form some nice bases after having some big runs during the rally. As long as it is orderly and on low volume the pullback would be a very positive situation for stocks. If volume rises well then evidently we will have to reanalyze our charts and then make the appropriate moves. It isn't rocket science. I had a feeling if more people kept it simple, they would do 100x better.

This was a great week for longs! I can only "hope" that there will be more to come. I hope everyone had a great week. I know it was a fun one for me. I will see you at Investors Paradise.


New Swing Longs: FTEK TRAD GILT BARI

Adding To Current Holdings: NOVA KBAY

New Swing Shorts: NONE

Longs Outperforming: OMRI-40 INPH-55 IHS-75 MWRK-33 MA-50 HSR NOVA BOT UAHC TDY KBAY PERY EVR APLX CPAK ICE SYX LWAY ORB XING INWK RSTI ISYS BEBE HRZ DECK AHS BMR AVCA LINTA TIBX CACB ALXA CVLT ALSK MNKD FCSE SUMT RWT OSIP CCOI NFLD ISIG SVNT EMS PRCP AXTI

Shorts Outperforming: SWC-41 DDE-21 USU KMP KMR ARLP ASA IPS ATPG SPWR

Stocks On Radar Screen: ITC GOOG MAIL SIGA ENZ ARRO FSH DCI GTSI ILC NWK