Sunday, June 14, 2009

A Late Day Surge Lifts Stocks by the Close of the Day as Volume Indicates Wall Street Started the Weekend Early

by Market Speculator

In front of the market was elections in Iran and new threats being made by North Korea. Despite this potential negative news stocks were able to get a lift at the end of the day by a flury of buying. Much of the day volume had been tapering off much below Thursday's level as stocks sank. Stocks didn't much selling pressure to drive down prices. Showing institutions weren't selling off their holdings in a hurry, a positive sign for this uptrend. On the downside, many leading stocks were hit hard throughout the day. The late day surge did cover up most of the damange done by the selling. Friday's market session was an indication a market which is showing signs of basing.

A few leading stocks suffered damage, a few of them were not able to hold their 10dma. During powerful uptrends leading stocks will often find support at their 10dma and continue their march higher. The action seen on Friday is a more of an indication we are not quite ready to see leading stocks continue their march higher. Not all leading stocks suffered, many of them did find support at their 10dma. The ones that did not did find support at their 21dma and 50dma. Positive signs were all around the market Friday but they were in the price and volume action of the leading stocks.

In John Boik's Monster Stocks he noted in his research that leading stocks in an uptrend will often find support at their 21dma and never fail. Once failures begin at the 21dma for market leaders it is a sign the market has nearly reached to the top of its run. Although we've seen some leading stocks take hits we have seen a majority find support at their 21dma.

Volume on the indexes as mostly dried up over the past two weeks. On the Russell 2000 volume dried up this week as the index found support and closed within 1% of last weeks close. Tight closes are a sign of strength and is very important to spot these to take note of the strength. The NASDAQ and S&P 500 closed within 1% of their prior weeks close. This is a clear sign of positive consolidation for the market and should be clearing the way for quality growth stocks to setup sound price patterns.

Keep positive and never give up. Cutting losses short will only keep you in the game longer and your powder dry for opportunties the market may present to you in the future.

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