Friday, June 05, 2009

Pushing Aside Dismal Economic News Stocks Advance in Higher Volume

Thursday's morning release of economic news did not show signs of a recovery for the US economy. This didn't stop stocks from getting support. It wasn't long after mid-morning stocks began to show signs of life. Volume on the NASDAQ ran hot throughout the day while NYSE volume was running a bit behind. A late day move in stocks helped stocks close out on the highs of the day. The bullish move at the end of the day highlighted the bullish nature of this market.

Leading stocks kept pace with the NASDAQ, but it was Small Cap stocks that took the lead. It is important to see leading stocks ahead of the major indexes. From a historical perspective, Small Cap stocks always lead the market. At the moment, Small Caps and Leading stocks are taking over leadership.

The crowd got bullish again with the AAIIBull index topped 46% while the AAIIBear index slid to 38%. A few weeks back AAII published a note stating 45% of those who were surveyed were not invested in equities. The highest amount EVER recorded by the AAII. Are those investors not invested in the market willing to come back in? This most recent rally will certainly have those not in the market itching to get back in. In addition, will equity funds see inflows from investors to put to work in the equity market? Big questions have yet to be answered but by the price and volume action of this market it appears they are putting cash to work.

Do not get caught up in the "why," why are we moving higher? Does it matter or does that we are moving higher that matters? Too often many investors are caught up in the "why" rather than taking action. All the time spent on the "why" will leave you without the time to study and find the stocks that are moving this rally. One of my favorite expressions: "it is what it is" plays nicely here. Remember, you can only control your own actions and not action of others. Focus on what is important, control your own actions and forget the "why" to CNBC.

Tomorrow morning we have the long awaited May Jobs report from the US government. The first Friday of every month is always a delight for CNBC as they bring in expert guests to talk about a number that no one can predict. Anything near or higher than -500k jobs lost will surely spark the bulls interest and bid up stocks. Especially retail stocks as they weighed down the market today. Any sign of further weakness in jobs lost we might see stocks ticker lower. More importantly it'll be how the entire week wraps up on the close Friday. It isn't until then can we make a rational thesis from the day.

Remember, always keep those losses small and come aboard to Big Wave Trading if you aren't already a member.

Enjoy your weekends and be safe.

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top speculative longs off the lows for PLATINUM members: GRRF 82% CSIQ 72% IPCS 60% GOK 68% ETWC 42% RUS 51% TMR 34% GRO 25% OSCI 38% PXLW 35% WPCS 46% RODM 31% CFW 33% TELK 39% BAA 29%


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