Wednesday, December 01, 2010

Stocks Jump on Global Economic News

“Simplicity is the key to brilliance” – Bruce Lee

Stocks turn in a big rebound as economic data in the US and China along with a positive Portugal bond offering help ease the fears of a European debt crisis. ADP Employment change was better than expected as its payroll survey showed an increase of 93,000 private payroll jobs. ISM manufacturing index edged down from October, but was slightly better than expected at a reading of 56.6. Mid-day a rumor of the US backing the IMF bailout fund for Europe pushed stocks to their highs only to have the rumor to be false. Stocks closed just off the highs of the day, but in line with the highs before the rumor mill picked up. Regardless, today was a positive day for the market as stocks jump pushing the NASDAQ above its April high.

Volume was lower, but there was a volume surge at the end of yesterday’s session skewing volume. Many funds have November year-ends and we cannot rule out some funds adjusting their portfolios heading into their year-ends. However, for much of the day the pace of volume outpaced Tuesday’s session which is a positive sign for the market. Like September 1st the first day of the month has been helpful to stocks and today was no exception.

Market leaders enjoyed today session despite some negative action a few yesterday. However, we stress we must pay attention to our own stocks and make decisions based upon their action. Your holdings are your most important decision making tool you have to gauge the market. Are your stocks going through “normal” corrections? IGTE is one of example of an abnormal correction where the stock took a dive to its 50dma on big volume. The stock was a leader until yesterday and its weakness carried forward into today’s action. If all our holdings acted like IGTE we’d be out of the market, but fortunately it was the only one despite the broad market sell-off. Stick to your stocks.

There are a few certain things in the market and that is you will never be able to OUTRESEARCH the big instiutions in the market. They have vasts amount of resources at their disposal to conduct research, it is best to follow their movement rather than to outdual them. Many traders feel they can outsmart the big boys as well as the market in general. Unfortunately, you will never outsmart the market despite all your efforts Accept the reality of the situation and it will only be then you’ll be able to become a successful trader.

A positive day for the stock market and as the greats like to say: the trend is your friend.

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