FInal Hour Support Gives Bulls Hope, From Early Morning Weakness.

After a slightly positive open, stocks soon took a turn for the worst as the ISM manufacturing index contracted for the first time in over three years. But stocks, once again, for the second day in a row, found late support and finished in the upper half of their daily trading ranges. Those respectable closes helped ease the pain of the early losses.

At the close, the DJIA was lower by .2%, the SP 500 was down .3%, the Nasdaq was down .8%, and the SP 600 was lower by .4%. Leading stocks kept pace with technology stocks, with the IBD 100 index down .7%. However, none of the stocks in the index saw nasty reversals or heavy volume losses. Oil was the winner, with the Philly Oil Service Sector Index up 1%; the SOX was the big loser, dropping 1%.

Breadth was negative on the NYSE by a 6-to-5 margin and negative on the Nasdaq by a 5-to-3 margin.

Volume was lower on both the NYSE and the Nasdaq. However, even if volume was higher, I would not call this day a distribution day.

The indexes all finished in the upper half of their intraday ranges. That shows buyers are stepping in to support any selloff. If it is because fund managers need to show performance or if they are missing this rally, it doesn't matter. The fact they are doing the supporting on any selloff is all I need to know.

For the week, the SP 500 fell .3%, the DJIA fell .7%, the SP 600 fell .9%, and the Nasdaq led the way down with a 1.9% smack in the face.

After such a big uptrend, coming off the July/August lows, it was surprising to only see the market pullback as much as it did this week. If you remember, we started Monday off with a very nasty selloff (SP 600 fell 2.3%) so the fact that we were able to pair back those losses as the week went by was quite impressive.

The late day support the past two days after what seemed to be like clear distribution days shows that this market is resilient and clearly has the side of the bulls on it no matter how overbougt this market may seem. Even if you here comparisons about the market being as overbought as the 1987 market, trust me you don't have to worry.

I have studied leading stocks then as well as in other phases of market cycles. Stocks will give us selling and profit taking warnings and once the selling starts we will have clear sell signals before the crash actually takes place. Just like in 2000.

Does this mean that this market is going to end in a crash? Nobody knows but with the talk of it going to...it more than likely will not. Bottom line: Nobody can predict the future and until the trend changes you must stay with that trend. You will ALWAYS have time to sell before the blood runs all over wall street and main street.

The bond market is suggesting that the economy is going to slowdown. The yield is at 11 month lows and that means that speculators expect a weakening economy looking forward.

Growing signs of economic weakness have traders betting on a new round of rate cuts. Futures traders now see a 72% chance that the central bank will cut rates 25 basis points by March. That's up from 52% on Thursday and 37% a week earlier.

It is interesting to note NOW that the economy is starting to show some weak numbers because of the 17 rate hikes (NOT Bush's economic agenda) all the bears start really telling us how right they are. After three years...congratulations! You finally got it right. Way to be wrong the whole uptrend and miss out on tons of stocks making 100% plus gains in short amounts of time. However, yipee, things aren't going as well as they should. Yeah. What a joke, you natural born perma-shorts are.

Unless the market is in a severe downtrend and shorting is the obvious play, being a short seller never will make you the kind of money as the CANSLIM or a form of the CANSLIM system can. I have NEVER met a professional FULL-TIME short seller that ONLY made his money from shorting stocks in uptrends and downtrends.

Do me a favor and check out how well the short-sales only mutual funds do. You will see they do not do very well. Go on check out the record. I dare you.

Until this market actually tops and we see leading stocks start taking it on the chin along with the speculative issues, we have no reason to bet against the trend. Until the market agrees with the economic data, shorting just to think that you are ahead of the curve will cause you great pain. How are those traders doing that were shorting the market in October 2005 when I heard it was all over or worse yet October 2002 when EVERYONE I knew was CONVINCED it was ALL OVER!! The whole market was done for trader. That marked the bottom right there.

Unless the trend is down, I will not short. When the market turns lower, I will have plenty of time to profit on the short side. For now I fear missing the 1999 gains in 1999 trying to be too smart and predict a top. How many traders would not buy breakouts in late 1999 because they were convinced the top was in. Then when the top came in March 2000 they were the late ones getting in and now their opinions had them convinced more was coming. Nope. Until this trend changes, I am staying long. Just like I have been since August.

Stocks are expected to remain choppy next week as investors look to key employment and manufacturing reports. I assume so they can see how quickly we are going to go into that recession the bears and GWB haters oh so want. Whatever happens, I will be ready.

Aloha and I will see you at Investors Paradise.

New Swing Longs: SRSL EFUT MEMY LNUX ACHN TZIX MDF OKS CAM

Adding To Current Longs: RMTR AMAG

New Swing Shorts: NONE

**Number is % gain since position taken. Only stocks up 25% have numbers**

Longs Up On The Day (low vol non-IBD excluded): HRT-48 IGLD-56 PTT-70 SVNT-93 IAAC-29 HRZ-72 CXW-36 AOB-85 INWK-53 DKS-28 WGA-28 AOI-27 ACP-25 ALTH-86 AMAG-43 ABI-28 AFT-28 BTJ GIFI DECK MAIL MALL APLX CELG NU INAP IIG WTS MSTR IMA RRC MIKR LINTA AMSF CMT ACTU DJO BMA BLUD PRFT ACGL ULTR CTCM EVEP SGZ CLRT RMTR RWT AEP NEXC PERY AYE NRF ETE IWOV ISBC HNZ TMO OEH PNW HOS GOT RVSB NRGP

Shorts Up On The Day: ELP HCBK

Stocks On Radar Screen: WBD LXU EDU TLF GSF APAGF PQ PGS KOG AKN VICL NUVA HSIC SLGN EGR CVV

Complete Sells/Take All Your Profits: