Sunday, June 21, 2009

The Dow Jones Industrial Average Slips with Crude Oil While the NASDAQ Remains the Leading Index

by Market Speculator

Friday saw a quadriple witching day pushing volume well above Thursday's level. The Dow Jones Industrial Average had slipped lower closing just short of a distribution day. Over on the NASDAQ, the composite index witness a day of accumulation. However, during the session the indexes were not able to hold the opening move. Sellers took over after the morning frenzy of option traders closing/rolling their positions. Only the NASDAQ was able to close above in its upper range for the day, but barely closing above its upper range. More importantly, leading stocks once again showed strength many of the leaders saw positive action. It is clear the NASDAQ is the leading major index and has positioned itself to continue it's move higher.

We are certainly seeing a lot of positive action in leading stocks. There is also very nice action in a few big cap stocks. Institutions love playing large liquid stocks and we are certainly seeing the accumulation by the big boys. At Big Wave Trading, we are saying on top of these leading stocks and taking advantage of the gains they are showing us. Leadership is the number one factor to take a look at when reviewing the entire market. They will light the path the market will take.

Highlighting a secondary indicator is the ratio of New Highs to New Lows. Only 5 new lows were hit on the NYSE and NASDAQ while 75 New Highs were hit. Although we aren't seeing a massive amount of new highs the ratio indicates there is much more positive action than negative.

Something else to highlight is the percentage of stocks over their 20dma, 50dma, and 200dma. On a short-term bases only 46% of stocks are over their 20dma compared to 59% a month ago. Again, at the moment there are 73% of stocks over their 50dma while 81% were a month ago. Short-term, it appears we have yet to reach a point where stocks are oversold and we have seen a nice pull back in stocks. Only the 200dma has more stocks over it now than a month ago: 72% versus 52%. Even these levels aren't near record levels like we saw in late 2007.

It certainly would be nice to get a few more weeks of sideways or basing action in the market. This will allow for leading stocks to continue to work on consolidating into tight patterns rather than forming wide, loose faulty bases. We have seen a few leading stocks breakdown from wide loose patterns causing many people to be pushed out of the stock. The more basing action we get from the indexes the more time it allows for leadership to continue to pound out sound tight price patterns.

Happy Father's Day to all the Dad's out there, we hope you enjoyed a great day with your family.

Keep positive and always remember to keep those losses short. At Big Wave Trading, we'll continue to enjoy the gains our stocks are showing us.

top longs w/ total returns since 1st buy making me money: TRIB 20% DPW 37% ISTA 78% ADAT 20% AVNR 97% FIRE 46% CAST 57% PALM 47% CRAY 39% CLRT 30% ATSG 67% ARST 34% INSM 32% PONE 26% COOL 37% RBY 61% ACTG 30% KONG 79% ANV 37% SIGA 36%///GOK 40% TXIC 63% ESIO 23% PWRD 74% WPRT 41% RAD 174% INSM 58% ATSG 27% PONE 37% TSTR 28% JADE 26% RODM 41% CFW 37% JOEZ 29% PWAV 88% PRC 41% WPCS 41% FREE 47% CYCC 26% TMR 25% EPEX 93%

FREE YouTube video that will help teach you how to read the market CORRECTLY without bias (this isn't ABC, NBC, or CNN):


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