We need to find a reason why the markets went higher today. I know I will pick that it was the mergers and that scared the shorts. Merger, mergers, and more mergers. I guess this is what we will attribute the gains in the indexes to. My guess is just as good as CNBC's guess.
It was a very good day for the indexes, with the Nasdaq rallying 1.5%, the SP 600 leaping 1.3%, the SP 500 jumping 1.1%, and the DJIA rising 1%. The better news comes from the IBD 100 and IBD 85-85 indexes. They both rallied 2%, leading the overall market. The best news of the day came from the DJ Trucking Index and the AMEX Airline Index. Those indexes rose 4.2% and 2.8% respectively.
Volume was higher today on both the NYSE and the Nasdaq. However, volume wasn't the most powerful, with volume barely rising 3% on the Nasdaq and 1% on the NYSE. This is an accumulation day but it doesn't have the feel of an obvious accumulation. A big jump (20% or more) in volume would have me LOVING this rally. However, I can only get a bit excited, because, to be honest, volume sucked.
Breadth was positive on the NYSE by a 3-to-1 margin and positive on the Nasdaq by a 2-to-1 margin.
OK, I have read all the pundits and all the market commentaries out there. I hear the bearish side and I hear the bullish side. I have come to the conclusion that this is purely a waste of time. I see so many commentators wasting so much time talking about how and why this market is going to fail that I wonder if they are investing/speculating/trading this market at all.
I keep hearing how everyone is bullish, yet after I go through the chat transcripts of blogs and chatrooms I see that a TON of people are shorting these upticks. Now I am not bullish or bearish but I am starting to get a ton of stocks, that I am already long, that are acting properly as they stairstep there way up. Being long 200 stocks it is hard to be bearish when I have so many stocks going up or sideways even after last weeks wild earnings ride.
Tonight, I only had one stock I had to get rid of. Out of 203 stocks, 177 were up. That is much better breadth than the overall market. That tells me that the right side is still the long side. Yes, there have been some hits here and there but if you look at my "longs up on the day" section, you will see that I am starting to get plenty of stocks up 25% or more now. I still haven't hit a homerun but the market isn't saying SELL SELL SELL.
This is why I think it is silly to try to call a failed breakout/top here. Until the market gives us some more CLEAR distribution days and I start having all my charts acting wrong, I have to remain long this market.
Could it roll over tomorrow? Yes. But what if it rallies 20% from here before rolling over? If it rolls over tomorrow, I take my current gains, cut my losses, and go to cash. If it rallies 20% from here, I am perfectly positioned for more gains in case EVERYONE is wrong.
The only problem I have is that the people that are bullish are VERY bullish. They are very loud and very vocal about how right they are. If you notice I AM NOT BRAGGING. I am simply stating facts. I have been writing this blog since March 2005 and have hit every intermediate market turn by not being a genius but by going on FACTS. FACTS are the ONLY thing that is going to make me money. Not guessing if this market is going to rollover and analyzing to death this silly market. The only way to make money is by listening to the market.
If you are not doing exactly what the market is doing then YOU are wrong. Not the market. No matter how much you don't like this rally, it is still a rally. You should be making money in this market. Trading/investing emotionally by dumping all your holding due to one 1% down day is stupid trading. It is emotional trading that will cause you to never make it in this game.
There is no place for emotional trading if you want to make it in this business. Staying agnostic in the stock market is the smartest thing you can do. Are there things that worry me about this rally? Of course. I stated them last week. However, am I going to trade on those worries? Hell no! I am trading on facts and facts state that stocks are breaking out and having a rough go of it but are still making gains.
It may not be 2003 or Oct-May 2005 but there are still plenty of great stocks out there. Just look below.
I will see you at Investors Paradise. Aloha!
New Swing Longs: OMCL EVEP VDSI WEL LMRA MALL
Adding To Holdings: CNH CCOI
Longs Up On The Day: MA-95 INWK-41 AOB-36 SYKE-38 XING-29 CXW-42 CHINA-27 TTEC-38 IHS-81 TYL-46 DA-45 HRZ-48 BMTI-41 OMTR-31 REGN-40 CCOI-32 FCSE-53 IDEV-31 BAM-43 CPAK-40 MIKR DIVX PRFT MVSN HRT CNH IAAC ICE NITE FTEK BEBE PCCC LINTA CPA ROG CAB TSRA BEAS AHS SMSC HCSG CELG ISE IGLD SEIC DECK PSPT LTM BMC INAP NSTC ACGL LMT PSMT BONT DJO DKS MAIL ICFI CVLT BMA SAI CBF ISIS FFH AXTI IGT MOS NEWP BMRN HGSI RSTI RWT CMCSA ETR VCP SVNT INO NWL AEP IMA NU TSG NHP GSL HNZ LNET PNW MFRI AFT SUAI TNH WGA
Stocks On Radar Screen: AMK FFIV SQM EAT CGPI ACTL FLML AW RBN KO
Cut All Your Losses: MYE
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