Monday, June 01, 2009

Following Through on Friday's Gains Stocks Stage Another Rally on Strong Volume

by Market Speculator

From the opening bell to the close stocks were being accumulated in a big way. Volume once again soared showing institutional support is behind stocks. We even saw quality growth stocks bust out and show tremendous strength. It was very important for the stock market to follow through with very nice gains after Friday's close. The action from stocks today is showing there is more room to run to the upside. Leaders have emerged to show quality is where the action will be at and the time is now to get on board with them. Leadership has taken hold and the overall price and volume action of the market is signalling this market wants to roll higher.

An important occurance happened today and that was the price and volume action following through from Friday's gains. It would have been terrible for stocks to roll over and essentially would have signaled the market wasn't going to move higher. Although we could have moved sideways in lighter trade today's session was much more favorable. Today proved institutions are willing to put their capital to work in stocks. Not only are they willing to put this capital to work they are supporting the quality growth stocks. We absolutely need institutional support for this market to go higher and we are seeing capital flow back into stocks.

There are quality growth stocks leading this market, a true sign of market strength is its leadership. We are beginning to see the type of stocks where you can build a sizeable position. Jesse Livemore, Jack Dryfus, William O'Neil and other great traders were able to plunge into the leaders and extract as much as their run as they could. There are these types of stocks out there at this moment that will allow us the opportunity to get long in size. It is getting long in size that will have a great effect on your overall portfolio performance.

Keeping in mind we have our backside to protect. We can not remember to cut our losses in cases where a stock is not acting right or its triggering a cut loss area. Generally speaking an 8% cut loss is an excellent area to look at. However, professionals are able to tighten up their cut loss to where sometimes it can be as low as 3%. It takes years and trading in the market to be able to know when a stock is not acting right and it is best to part ways.

A mistake many traders make is giving up on a stock once they have cut their loss. Some times stocks will give a buy signal and fail to continue to move higher and go on to form another base. It is important that if the fundamental growth picture hasn't changed to not give up on a stock just because it failed the first time. Many times some of these do come back and offer up great opportunities to get long. There are a few examples of these happening now. Our platinum members got a glimpse of these last night during a discussion with Joshua and I. Keeping your watchlist up to date is very important in your trading arsenal.

A very positive day in the market, now it is time to take advantage of the opportunities that lie ahead. Big Wave Trading and its members are certainly enjoying and will enjoy a move higher.

top longs w/ TOTAL returns since purchase making money TODAY: KONG 84% ATSG 76% FIRE 48% SIGA 48% ASCA 41% PALM 34% CAST 33% WAVX 31% ADAT 27% ISTA 25% ARST 29%

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